Stock Options

Apple Computer Inc.'s chief executive, Steven P. Jobs, captivated an audience of thousands at San Francisco's Moscone Convention Center yesterday as he unveiled Apple's newest products at the company's annual Macworld trade show. But this year's show-and-tell is more keenly anticipated than most. Some industry-watchers think the appearance could be Jobs' last as Apple struggles to deal with the backdating of stock options. Apple stock rose nearly 5 percent last month after the board issued a report from a panel led by former Vice President Al Gore that concluded Jobs had broken no laws.

DETROIT -- Struggling Ford Motor Co., which posted a record $12.7 billion loss in 2006, agreed to pay its new CEO, Alan R. Mulally, more than $28 million to help rescue the 103-year-old automaker, according to a filing yesterday with the Securities and Exchange Commission. Mulally, a former Boeing Co. executive who was the keynote speaker at the New York auto show this week, publicly accepted the Ford job in September. While his annual salary is set at $2 million, his compensation package for last year included $666,667 in salary for the final quarter of the year, as well as a host of other add-ons.

SafeNet Inc., the Harford County technology company under federal investigation for its stock option grants, has reached settlement agreements with two of its former top executives, according to documents filed late yesterday with the Securities and Exchange Commission. The executives, Anthony A. Caputo, former chairman and chief executive, and Carole D. Argo, who was president, chief operating officer and acting chief financial officer, resigned in October amid an investigation into the company's stock options.

SAN FRANCISCO -- Bonnie Brown was fresh from a nasty divorce in 1999, uncertain of her future. On a lark, she answered an ad for an in-house masseuse at Google, then a Silicon Valley startup with 40 employees. She was offered a $450-a-week part-time job, with a pile of Google stock options that she figured might never be worth a penny. After five years of kneading engineers' backs, Brown retired, cashing in millions of dollars of stock options. The shares she held onto have continued to balloon in value.

DENVER -- Qwest's former investor-relations director Lee Wolfe testified yesterday that he committed illegal insider trading, but has received partial immunity. His testimony came during the first full day of witness examinations in the insider-trading trial of former Qwest chief executive Joseph P. Nacchio, who is accused of dumping $101 million in Qwest shares shortly before the stock tumbled. Wolfe was the first witness to be questioned. From January 2001 to April 30, 2001, Wolfe exercised and sold 25,000 stock options for a pretax profit of $646,000, he said.

Black & Decker Corp. Chief Executive Officer Nolan D. Archibald earned $4.35 million in salary, bonuses and long-term incentives and cashed in $31.85 million in stock options in 1998, a year in which the company's market value rose about $1.5 billion.Archibald's 1998 compensation was 5.6 percent less than the $4.61 million he earned the previous year. It was disclosed in the company's proxy statement -- filed with the Securities and Exchange Commission this week -- in advance of the Towson-based power tool maker's annual meeting April 27 in Easton.

DETROIT -- Alex Trotman received $18.8 million in salary, bonus and other compensation in his final year as chairman and chief executive of Ford Motor Co., the world's second-largest carmaker.Trotman, who retired Dec. 31, also received a previously undisclosed $24.1 million payment last year for his 1997 award under Ford's long-term incentive plan, which rewards executives for performance on stock appreciation, product quality and cost-cutting. He gained an additional $30.1 million from the exercise of previously granted stock options.

TRADITIONALLY, your pay has depended on real things: your line of work, seniority, performance, expertise. But not anymore -- at least, not in the white-collar world.Nowadays, compensation feels more like a lottery. You might, or might not, luck into a job that gives stock options. The options might, or might not, pay off.Employees with traditional pay get modest raises. The consulting firm William M. Mercer thinks that average salaries will rise by around 4 percent next year.Employees with stock options might luck into giant paychecks.

Wild rides in computer-technology and Internet stocks can leave growth-stock mutual fund managers with a strange sense of being observers rather than managers of their own portfolios.Large, sometimes unnerving price swings in stocks such as America Online Inc. cast doubt on the investment process that stock pickers claim as the essence of their work. No one needs a tour guide on a roller coaster.Of course, when stock prices are climbing it's hard to complain. But sharp rallies often spell volatility rather than sustainable long-term returns.

Aegon NV, the large Dutch insurance company that has its U.S. headquarters in Baltimore, is planning to pay $181.2 million to the chairman and chief executive officer of Transamerica Corp., the San Francisco insurer that Aegon is acquiring.Frank C. Herringer, the Transamerica CEO, would receive $145.8 million in previously vested stock options, Transamerica said yesterday.In addition, Herringer would get $35.4 million in incentive-plan payments and in unvested stock options that will become exercisable when Aegon's $10.8 billion purchase of Transamerica is completed.

Now that American taxpayers are about to set up the biggest-ever vulture investment fund, let's make sure they get the same kind of action as Wall Street's traditional carrion fowl. Vulture investors swoop in where other investors fear to go, providing cash to panicked sellers and keeping shaky markets from falling even further. But they have a price: a large share of the upside when things get back to normal. Washington should demand nothing less from the banking institutions it is about to rescue.

A federal grand jury has indicted Henry T. Nicholas III on fraud charges, according to documents unsealed yesterday that also accuse the California billionaire of supplying customers with prostitutes and drugs and slipping Ecstacy into the drinks of unwitting technology executives. In a 21-count indictment, Nicholas and former Broadcom Corp. Chief Financial Officer William J. Ruehle were charged with backdating millions of stock options for five years to improperly reward employees of the Irvine, Calif.

The requirement for public companies to include stock options in reported costs is two years old. The art of pretending stock-option expense doesn't matter is still reaching new heights. Martine Rothblatt, chief executive of United Therapeutics, will certainly rank as one of Maryland's top-paid executives for 2007 when all the numbers come out. She got $24 million in stock options alone - $20 million of it in the fourth quarter. But the Silver Spring biotech company twists itself into curlicues, acting as if its 96 percent, fourth-quarter profit erosion - caused largely by the options - is just an accounting technicality.

NEW YORK -- Carole D. Argo, a former chief financial officer at Belcamp-based SafeNet Inc., was sentenced to six months in prison yesterday by a Manhattan federal court judge for her role in manipulating the company's stock-option awards. She pleaded guilty in October to one count of securities fraud for falsifying the Harford County company's financial reports, in an effort to earn Argo, her boss and some of her other colleagues awards and bonuses worth millions. Prosecutors say she illegally backdated stock options without recording the necessary compensation charges.

SAN FRANCISCO -- Bonnie Brown was fresh from a nasty divorce in 1999, uncertain of her future. On a lark, she answered an ad for an in-house masseuse at Google, then a Silicon Valley startup with 40 employees. She was offered a $450-a-week part-time job, with a pile of Google stock options that she figured might never be worth a penny. After five years of kneading engineers' backs, Brown retired, cashing in millions of dollars of stock options. The shares she held onto have continued to balloon in value.

Trading in options to buy shares of MedImmune Inc. surged to the highest in at least 11 1/2 years during the two days before the Gaithersburg biotechnology company announced that it was exploring a possible sale. The number of MedImmune call-option contracts traded Tuesday and Wednesday was 62,485, the largest two-day total ever, according to Bloomberg data that go back to September 1995. MedImmune said yesterday that it was considering a sale amid interest from major pharmaceutical companies and pressure from shareholders.

Harford County technology company SafeNet Inc. ended its life as a public company yesterday, shielding it from scrutiny of its accounting issues and stock options investigations and eliminating the threat that its shares would be delisted. The company was taken private by California-based private equity firm Vector Capital, which acquired it for about $634 million, or $28.75 per share. Shares halted trading on the Nasdaq about 9 a.m. yesterday, according to Nasdaq. "Vector Capital is a leading technology private equity firm, and we are extremely excited to have the opportunity to work with them," Chris Fedde, SafeNet's president and chief operating officer, said in a statement.

SAN JOSE, Calif. -- Less than three years after it went public, Google is confronting one of the more confounding consequences of its phenomenal success: a potential brain drain if its earliest - and richest - employees quit after earning the right to cash in the last of the stock options that made them millionaires. Hundreds of the 2,300 Googlers hired before the Internet juggernaut's initial public offering in August 2004 are hitting their fourth anniversary. When they do, they'll be free to cash in the final portions of their pre-IPO stock options, collectively worth an estimated $2.6 billion before taxes.

SafeNet Inc., the Harford County technology company embroiled in an options probe that has agreed to be acquired by a California private equity firm, said yesterday that enough shares have been tendered for the deal to go through. The company also said, however, that it is extending the deadline until tomorrow night to allow for more shares to be tendered. The acquisition requires the tendering of 78 percent of SafeNet's shares. "The net effect, we expect, would be a higher result than the 78 percent we are at this morning," said Gregg Lampf, director of investor relations.

DETROIT -- Struggling Ford Motor Co., which posted a record $12.7 billion loss in 2006, agreed to pay its new CEO, Alan R. Mulally, more than $28 million to help rescue the 103-year-old automaker, according to a filing yesterday with the Securities and Exchange Commission. Mulally, a former Boeing Co. executive who was the keynote speaker at the New York auto show this week, publicly accepted the Ford job in September. While his annual salary is set at $2 million, his compensation package for last year included $666,667 in salary for the final quarter of the year, as well as a host of other add-ons.