McAfee, Inc. announced that it commenced action to amend certain stock options granted to former executive officers and certain current directors. The option measurement date changes and strike price changes cited below represent a small subset of the overall measurement date changes and strike price changes that McAfee expects it will have to make in the future as a result of its stock option review and pending restatement of its previously filed financials.
McAfee took the corrective actions described below to address certain findings from the Company’s stock option review and the related potential tax consequences arising from Internal Revenue Code Section 409A. In the case of the former executive officers, the exercise prices of the unexercised portion of their grants are being adjusted upward to match the stock price on the date Compensation Committee approval was obtained or employment commenced. In the case of the current directors, the exercise prices of their grants are being corrected to adjust for clerical errors of which the current directors were made aware of as a result of the stock option review. In addition to the items described below, McAfee may take additional remedial measures with respect to prior stock option grants.
Upward Repricing of Options Granted to Former Executive Officers
George Samenuk. A stock option grant covering 300,000 shares of common stock granted on May 4, 2004 to George Samenuk, McAfee’s former Chief Executive Officer, with an exercise price of $16.57 per share (the “Samenuk May 4, 2004 Option Grant”) was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Samenuk May 4, 2004 Option Grant (46,250 shares) to $16.75 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of July 21, 2004, the date on which Compensation Committee approval was obtained.
A stock option covering 420,000 shares of common stock granted on January 16, 2002 to George Samenuk, McAfee’s former Chief Executive Officer, with an exercise price of $25.43 per share (the “Samenuk January 16, 2002 Option Grant”) was amended unilaterally by the Board to increase the exercise price of the Samenuk January 16, 2002 Option Grant to $27.19 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of January 15, 2002, the date on which Compensation Committee approval was obtained.
Kevin Weiss. A stock option covering 250,000 shares of common stock granted to Kevin Weiss, McAfee’s former President, on October 15, 2002 with an exercise price of $13.30 per share (the “Weiss October 15, 2002 Option Grant”) was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss October 15, 2002 Option Grant (94,792 shares) to $15.89 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of October 31, 2002, the date Mr. Weiss commenced employment with McAfee.
A stock option covering 100,000 shares of common stock granted to Kevin Weiss on July 16, 2003 with an exercise price of $12.20 per share (the “Weiss July 16, 2003 Option Grant”) was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss July 16, 2003 Option Grant (79,167 shares) to $14.60 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of July 15, 2003, the date on which Compensation Committee approval was obtained.
A stock option covering 100,000 shares of common stock granted to Kevin Weiss on December 10, 2003 with an exercise price of $13.41 per share (the “Weiss December 10, 2003 Option Grant”) was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss December 10, 2003 Option Grant (70,833 shares) to $17.00 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of January 20, 2004, the date on which Compensation Committee approval was obtained.
A stock option covering 100,000 shares of common stock granted to Kevin Weiss on May 4, 2004 with an exercise price of $16.57 per share (the “Weiss May 4, 2004 Option Grant”) was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss May 4, 2004 Option Grant (60,417 shares) to $16.75 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of July 21, 2004, the date on which Compensation Committee approval was obtained.
