(and you wonder where they stole that Casual Male XL idea from)
I thought this 8-K filing by Casual Male Retail Group (CMRG) was pretty interesting - focus on the bolded sentence:
(e) On January 29, 2009, Casual Male Retail Group, Inc. (the “Company”), pursuant to Board approval, repurchased certain stock options with exercise prices significantly in excess of market price from certain directors and executive officers, including David A. Levin, its President and Chief Executive Officer, and Dennis R. Hernreich, its Executive Vice President, Chief Financial Officer, Chief Operating Officer and Treasurer. Such repurchases were made pursuant to separate Option Repurchase Agreements with each of the individuals. The Company repurchased and cancelled the eligible options in exchange for cash payments equal to the fair value of the applicable options on the date of repurchase, as determined using Black-Scholes. The Black-Scholes value of each option repurchased was calculated based upon the closing stock price of the Company’s common stock on January 29, 2009.This is nothing but pure cronyism. All management is doing is tossing out their old options so they get newer, cheaper ones at lower prices. The least they could do is refuse to accept any cash for these worthless, out-of-the-money ones.
The Company repurchased options with underlying shares totaling 2,291,512 for an aggregate purchase price of $7,191.73. These options had exercise prices ranging from $4.54 to $12.35 per share. Of the 2,291,512 shares underlying the repurchased and cancelled options, options covering 1,206,854 shares issued under the Company’s 2006 Incentive Compensation Plan (the “2006 Plan”) were repurchased and, pursuant to the terms of the 2006 Plan, will become available for future issuance under the 2006 Plan. In connection with the repurchase and cancellation of these options, the Company will recognize additional stock compensation expense of approximately $1.5 million in the fourth quarter of fiscal 2008 relating to the acceleration of vesting associated with the options.
The Company believes that this action enhances long-term stockholder value by improving the Company’s ability to incentivize and retain its employees, as well as reducing the Company’s equity award “overhang” (that is, the number of shares subject to outstanding equity awards relative to the total number of shares of common stock outstanding) through the cancellation of outstanding options that currently provide no meaningful retention or incentive value to the Company’s employees.
But the real funny part is that the company believes that "this action enhances long-term stockholder value by improving the Company’s ability to incentivize and retain its employees."
Think about that for a second.
We are in an awful recession! It has never been EASIER to retain employees, especially in retail. It's not like Macy's (M) or Liz Claiborne (LIZ) are hiring!
Casual Male should be CUTTING the pay of its big shots. After all, the company is expected to lose money over the next two years, and like I said, with the economy in the toilet, employee retention isn't a problem for anyone these days.
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