Forced to exercise...
excercise stock options, that is. In short, are hypotheical losses from an early employee stock exercise an economic damage? There is at least one case, that says yes. Anyone know of any more cases?
See:
Stock Inflates Damage Award
The Tenth Circuit has affirmed a case where the measure of damages included the appreciation of stock, after the employee was forced to prematurely exercise stock options. Greene v. Safeway Stores, Inc. , Nos. 99-1215, 99-1228, 2000 WL 504738, at *1 (10th Cir. Apr 28, 2000).
At the time of Greene's termination, he had 250,000 fully vested Safeway stock options. The exercise price was $1 per share. Greene also had roughly 250,000 more options that had not yet vested. The subscription agreement required plaintiff to exercise his vested options within ninety-five days of his separation from Safeway. Had Greene not exercised the vested options within ninety-five days, they would have expired.
Greene exercised all of his vested opinions on December 21, 1993 and acquired Safeway stock with a market value in excess of $3,000,000. Greene's gain on the transaction was roughly $2,160,000. Greene immediately incurred a tax liability of roughly $850,000.
Greene testified at trial that, had he not been terminated, he would have refrained from exercising his stock options until the date he planned to retire. Greene also testified he sold all of the shares he acquired within a few months of exercising them because he needed to pay the Internal Revenue Service and because he was without income to cover his daily living expenses.
During the trial, Greene had an accountant testify that, had Greene exercised his vested options on January 31, 1996, instead of December 21, 1993, he would have reaped the benefit of increases in the market value price of Safeway stock for an incremental gain in excess of $3,000,000. The accountant also testified that, had Greene retired from Safeway in November 1995, as he had planned, options that had not yet vested at the time of Greene's termination would have vested and could have been exercised to purchase additional Safeway stock for a gain of more than $1,000,000.
The appellate court agreed that stock appreciation could be included in the damage award.
This decision demonstrates that substantially more than lost wages can easily be at risk should an employee wrongfully terminate an employee with options.
See:
Stock Inflates Damage Award
The Tenth Circuit has affirmed a case where the measure of damages included the appreciation of stock, after the employee was forced to prematurely exercise stock options. Greene v. Safeway Stores, Inc. , Nos. 99-1215, 99-1228, 2000 WL 504738, at *1 (10th Cir. Apr 28, 2000).
At the time of Greene's termination, he had 250,000 fully vested Safeway stock options. The exercise price was $1 per share. Greene also had roughly 250,000 more options that had not yet vested. The subscription agreement required plaintiff to exercise his vested options within ninety-five days of his separation from Safeway. Had Greene not exercised the vested options within ninety-five days, they would have expired.
Greene exercised all of his vested opinions on December 21, 1993 and acquired Safeway stock with a market value in excess of $3,000,000. Greene's gain on the transaction was roughly $2,160,000. Greene immediately incurred a tax liability of roughly $850,000.
Greene testified at trial that, had he not been terminated, he would have refrained from exercising his stock options until the date he planned to retire. Greene also testified he sold all of the shares he acquired within a few months of exercising them because he needed to pay the Internal Revenue Service and because he was without income to cover his daily living expenses.
During the trial, Greene had an accountant testify that, had Greene exercised his vested options on January 31, 1996, instead of December 21, 1993, he would have reaped the benefit of increases in the market value price of Safeway stock for an incremental gain in excess of $3,000,000. The accountant also testified that, had Greene retired from Safeway in November 1995, as he had planned, options that had not yet vested at the time of Greene's termination would have vested and could have been exercised to purchase additional Safeway stock for a gain of more than $1,000,000.
The appellate court agreed that stock appreciation could be included in the damage award.
This decision demonstrates that substantially more than lost wages can easily be at risk should an employee wrongfully terminate an employee with options.
Labels: damages, employment cases
posted by The Experts @ 10:30 AM
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