Lots of staffers at Clear Channel Communications have stock options at $36 from the company’s 2008 Executive Incentive Plan. If you’ve checked the stock price lately that’s not much of an incentive, so the target has been moved.
Eligible employees holding those options with a $36 strike price will be able to exchange them for half as many options, but with a $10 strike price. The stock of CC Media Holdings, the parent company of Clear Channel Communications, closed Friday (2/18) at $7.25.
The exchange offer, which is being sent to eligible employees, expires March 21st. According to an SEC filing by CC Media Holdings, there were eligible options to purchase 2,781,876 shares outstanding as of January 31st. It did not indicate how many employees are holders.
The new replacement options will be unvested at issue, so employees will have to stay at Clear Channel for at least a year to have any of them vest, or four years to complete the vesting in quarters. In addition, the options are divided into three equal tranches, with one-third vesting based simply on the passage of time and the other two vesting based on both time and achievement of investment return targets for the company’s primary owners, Bain Capital and Thomas H. Lee Partners.
RBR-TVBR observation: Lest you suspect some ulterior motive, please note that current and former members of the board of directors are NOT eligible to participate in the option exchange. This really is aimed at motivating operating level managers to help build the company’s business and get the stock price up.