John Hogan takes CC Media Holdings up on its offer


Clear Channel Radio CEO John Hogan wasted no time in taking advantage of the offer made by the company to let employees re-price some way-out-of-the-money options. Hogan appears to be the highest-ranking employee eligible to participate, since current and former members of the board of directors are excluded.

Under the exchange offer, employees holding options to buy the stock of parent company CC Media Holdings at a strike price of $36 from Clear Channel’s 2008 Executive Incentive Plan are eligible to exchange them for half as many new options with a strike price of $10. The deadline to make the exchange is March 21st.

Hogan moved quickly and, according to an SEC filing, exchanged his old options for 27,074 new ones. They are still out of the money, but much closer than the old ones. It appears Hogan held a little less than 2% of the options eligible for the exchange, 54,148 (twice the number received under the conversion); since the company listed 2,781,876 eligible options outstanding as of January 31st. Lots and lots of Clear Channel managers hold the rest.

RBR-TVBR observation: There are provisions other than price to consider, such as vesting and the profit targets for key owners Bain Capital and Thomas H. Lee Partners which bear on a portion of the options. But unless you expect the stock price to recover and top $36 in just a few years, it is hard to figure why any Clear Channel manager would pass up the option exchange offer.