Monday, July 24, 2006

Misery Loves Company. The Company Loves A Profit.

The Associated Press in the Northwest Florida Daily News reports on how some company's officers made a killing in the days after 9/11/2001.
On Sept. 21, 2001, rescuers dug through the smoldering remains of the World
Trade Center. Across town, families buried two firefighters found a week
earlier. At Fort Drum, on the edge of New York's Adirondacks, soldiers readied
for deployment halfway across the world.
Boards of directors of scores of American companies were also busy that day. They handed out millions of bargain-priced stock options to their top executives.

The attacks knocked the markets for a loop but they have since recovered. Options let in the days immediately following September 11, 2001 rapidly appreciated for those lucky enough to be able to vote to give them to themselves.

These included, according to the Wall Street Journal, some of America's best-known brands. Executives from Home Depot Inc., Black & Decker Corp., UnitedHealth Group Inc., Merrill Lynch & Co., and Teradyne Inc. Teradyne that month gave its CEO more than 600,000 options at a price enabling him to buy stock at 24 percent below its pre-attack level, according to the WSJ.
Black & Decker, the tool maker, wasn't in the habit of giving options to its
very top executives in September. Proxy filings, which typically list grants to
the companies' five highest-paid executives, indicate Black & Decker hadn't
given them options in September since at least 1994. But on Sept. 21, 2001, with
the stock down nearly 20 percent in the wake of the attack, directors granted
hundreds of thousands of options to the top five executives and 37 others.

That means an extra $1.4 million in profit for its CEO than if the attacks never happened.

Click the title to read the rest.

2 comments:

Evansville Observer said...

Yes, after a crash, it is nice to know who gets the sweetheart deal on call options.

It is an even more interesting thing to know who was holding heavy put options before the 9/11 event, and they would be oex put options. By tracing these positons around the world, one might have been able to trace who was in the know. I wonder if this info is classified.

Also, what about Newton---how come when the towers came down they defied Newton's law. I suppose the explosives helped with the equation.

Nathan said...

Hey, does this mean that, therefore, Misery loves Profit? QED!