RECONSIDERING ADAPTEC: An item here Monday took to task
Milpitas-based Adaptec Inc. for quietly disclosing an expected revenue
shortfall in a conference call with analysts, while individual investors heard
only about the company's acquisition of a unit from the beleaguered South
Korean conglomerate Hyundai.
The item also might have pointed out that stock in Adaptec, which makes
adapter cards that connect PCs and disk drives, had been a stellar performer
before the disk-drive glut and the Asian flu knocked it down. Adjusted for
splits, Adaptec's shares moved from below $8 in late 1993 to better than $50
last autumn.
But past performance is little solace to investors who've watched their stock
sink in value since. And just as Adaptec didn't shout out loud about its
shortfall or the suspension of its stock buyback, it's also kept quiet about
having re-priced employee stock options in late January.
Many companies re-price options. Oracle Corp. (Nasdaq, ORCL) and 3Com
Corp. are two recent examples. They, like Adaptec, say re-pricing is
important to retain employees.
But as has been argued here before, re-pricing options makes the
compensation device more of an entitlement than an incentive. And it's a break
investors don't get.
Oracle and 3Com didn't reprice options for executive officers, but Adaptec did.
Regular employees who re-priced options will have to wait six months longer
than previously for the options to vest. Top management will have their
vesting schedule pushed back a year.
From San Jose Mercury News, 2/24/98 |
