All employees – other than members of Lucent’s senior
management – will be eligible to trade in stock options
with strike prices of $12.14/share or more.
The grant price of the new options will be equal to the average high and low sales prices of Lucent’s common stock on or about November 25, when the exchange is expected to be completed, according to Reuters.
Lucent said the offer is not counted as a repricing of options because it is being done six months and a day after May 22, when it will expire. If it had been done earlier, Lucent would have had to take a charge against earnings for as long as those repriced options remained outstanding.
So-called ‘six-and-one’ exchanges became increasingly common last year after new accounting rules made it more difficult to simply reprice options.
Under the exchange program, employees with options worth more than $50 will receive one share option for every six at the old price. For options worth:
- $40 to $49.99, the ratio is 1-to-4
- $25 to $39.99, the ratio is 1-to-2
- $12.14 to $24.99, employees will receive one new option for every 1.25 options at the current price
About 252 million shares are eligible under the option, and 100 million options would be eliminated if all who were eligible took part.