Ciena offers trade-in on stock options

Swap is hoped to inspire employee incentive

April 18, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Ciena Corp., the Linthicum maker of fiber-optic equipment, said yesterday that it will offer employees who hold stock options with a "strike" price higher than $12 a share the opportunity to trade them in for new ones.

The offer comes as Ciena's stock price is trading in the $8 to $9 range - well below its 52-week high of $70.89 or its all-time-high closing price of $149.50 in October 2000. Shares closed yesterday at $8.74, up 19 cents.

Jay Ritter, a stock analyst who covers Ciena for Morningstar Inc. of Chicago, said the offer Ciena made yesterday is not uncommon in the technology industry.

It is something that many companies, "particularly technology companies who use options as a significant portion of compensation," are doing, Ritter said.

Under Ciena's offer, workers can get one new option for every two they received before Oct. 16, 2001, that have an exercise price, or strike price, of more than $12. Each option received after Oct. 16, 2001, can be swapped out for one new option, according to a document filed yesterday with the U.S. Securities and Exchange Commission.

The offer is set to expire May 17, unless it is extended. The strike price for the new options will be set about six months and a day after the offer expires, according to the SEC filing.

Ciena made the offer to employees because many of the workers had stock options with exercise prices much higher than where the stock has been trading lately, according to the SEC document.

"We believe that this offer will provide renewed incentives to our employees and that, for many eligible employees, the exchange will create a better opportunity to obtain value from their options," the document says.

All U.S.-based Ciena employees are eligible for the options, according to the SEC document. The company's executive officers and directors - including Executive Chairman Patrick H. Nettles and President and Chief Executive Officer Gary B. Smith - are not eligible, according to the document.

Ciena hopes the offer will create a stronger incentive for workers to help the company grow and succeed, and will encourage workers to stay with Ciena, according to the document.

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