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Technology Stocks : KLA-Tencor Corporation (KLAC) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (1739)	8/28/2003 1:18:58 PM
From: TI2, TechInvestorToo	Read Replies (1) \| Respond to of 1779

Options bring bounty to KLA-Tencor CEO Schroeder Thursday August 28, 12:15 pm ET By Daniel Sorid SAN FRANCISCO, Aug 28 (Reuters) - Investors in semiconductor industry stocks have recently had some very good months, but few have had as good a run as KLA-Tencor Corp. (NasdaqNM:KLAC - News) Chief Executive Kenneth Schroeder. Since June, Schroeder has sold $13.9 million worth of KLA-Tencor stock he received from stock options, according to insider selling records filed with the U.S. Securities and Exchange Commission (News - Websites). More than $11 million of the proceeds were profit. That's not a bad boost for a man who earned $710,000 in salary and bonus last year. It's also not an unusual occurrence at KLA-Tencor, the top producer of process control equipment for microchip makers. Kenneth Levy, the company's chairman, recently acquired 50,000 shares from a stock option grant and immediately sold the shares, at a profit of $2.4 million, records show. KLA-Tencor insiders have sold $38.4 million in stock in the last 90 days, 40 percent more than the nearest industry peer, Novellus Systems Inc.(NasdaqNM:NVLS - News), according to Thomson Financial. Both Levy's and Schroeder's stock sales reflect the continued practice of executives acquiring shares from stock options at prices well below the current market level, then selling the shares for a profit on the same day. Pay experts say that practice distorts an original intention of options: to give executives a long-term stake in the company's success by building up their stock holdings. Schroeder now holds only 210,000 KLA-Tencor shares, fewer than the 260,000 shares he sold in the last few months. "There are a number of reasons why options were introduced, and part of that was to allow executives to increase their stock holdings," said Paul Hodgson, senior research associate at corporate governance group The Corporate Library. "It's not necessarily a quick buck, but if you are going to benefit from an increase in stock price you also need to hold onto the stock." The recent rally in technology stocks has brought back memories of the super-sized gains some CEOs made on options during the 1999-2000 stocks boom. Because Schroeder's options were issued at a time when KLA shares traded at around $10, the 260,000 shares he acquired and sold were tremendously profitable. On Thursday, the shares were at $58.28, down 23 cents, in midday trade on Nasdaq. A spokesman for KLA-Tencor declined to comment on the stock sales. Schroeder, through the spokesman, also declined to make a comment. KLA-Tencor shares have jumped nearly 90 percent since February, driven by renewed expectations that spending on the company's testing and measurement equipment will increase as chip makers invest in next-generation technologies. Technology companies made popular the practice of issuing stock options as a supplement to salaries and bonuses, and as a way to give employees an incentive to help the company succeed. An option gives the recipient the right to buy stock at a fixed price at some point, usually a few years, in the future. If the stock price rises above the original price of the option, the stock option can be exercised and the resulting shares sold at a profit. If the stock falls or stays the same, the option becomes worthless. The use of stock options has been declining as more companies have voluntarily begun to treat options grants as a cost. Corporate governance activists and some investors have called on more companies to expense stock options, although current rules allow options to be treated as if they were free. In Silicon Valley, many companies still rely on options as a key part of compensation packages. biz.yahoo.com