SANTA CLARA, Calif., Dec. 29 /PRNewswire-FirstCall/ -- McAfee, Inc. today announced that it commenced action to amend certain stock options granted to former executive officers and certain current directors. The option measurement date changes and strike price changes cited below represent a small subset of the overall measurement date changes and strike price changes that McAfee expects it will have to make in the future as a result of its stock option review and pending restatement of its previously filed financials.
McAfee took the corrective actions described below to address certain findings from the Company's stock option review and the related potential tax consequences arising from Internal Revenue Code Section 409A. In the case of the former executive officers, the exercise prices of the unexercised portion of their grants are being adjusted upward to match the stock price on the date Compensation Committee approval was obtained or employment commenced. In the case of the current directors, the exercise prices of their grants are being corrected to adjust for clerical errors of which the current directors were made aware of as a result of the stock option review. In addition to the items described below, McAfee may take additional remedial measures with respect to prior stock option grants.
Upward Repricing of Options Granted to Former Executive Officers
George Samenuk. A stock option grant covering 300,000 shares of common stock granted on May 4, 2004 to George Samenuk, McAfee's former Chief Executive Officer, with an exercise price of $16.57 per share (the "Samenuk May 4, 2004 Option Grant") was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Samenuk May 4, 2004 Option Grant (46,250 shares) to $16.75 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of July 21, 2004, the date on which Compensation Committee approval was obtained.
A stock option covering 420,000 shares of common stock granted on January 16, 2002 to George Samenuk, McAfee's former Chief Executive Officer, with an exercise price of $25.43 per share (the "Samenuk January 16, 2002 Option Grant") was amended unilaterally by the Board to increase the exercise price of the Samenuk January 16, 2002 Option Grant to $27.19 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of January 15, 2002, the date on which Compensation Committee approval was obtained.
Kevin Weiss. A stock option covering 250,000 shares of common stock granted to Kevin Weiss, McAfee's former President, on October 15, 2002 with an exercise price of $13.30 per share (the "Weiss October 15, 2002 Option Grant") was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss October 15, 2002 Option Grant (94,792 shares) to $15.89 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of October 31, 2002, the date Mr. Weiss commenced employment with McAfee.
A stock option covering 100,000 shares of common stock granted to Kevin Weiss on July 16, 2003 with an exercise price of $12.20 per share (the "Weiss July 16, 2003 Option Grant") was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss July 16, 2003 Option Grant (79,167 shares) to $14.60 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of July 15, 2003, the date on which Compensation Committee approval was obtained.
A stock option covering 100,000 shares of common stock granted to Kevin Weiss on December 10, 2003 with an exercise price of $13.41 per share (the "Weiss December 10, 2003 Option Grant") was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss December 10, 2003 Option Grant (70,833 shares) to $17.00 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of January 20, 2004, the date on which Compensation Committee approval was obtained.
A stock option covering 100,000 shares of common stock granted to Kevin Weiss on May 4, 2004 with an exercise price of $16.57 per share (the "Weiss May 4, 2004 Option Grant") was amended unilaterally by the Board to increase the exercise price on the unexercised portion of the Weiss May 4, 2004 Option Grant (60,417 shares) to $16.75 per share, an amount equal to the fair market value of the underlying shares of our common stock on the revised measurement date of July 21, 2004, the date on which Compensation Committee approval was obtained.
Amendment of Director Options
On December 22, 2006, McAfee also commenced the correction of clerical errors associated with the granting of options to purchase common stock to current directors of McAfee. These clerical errors were discovered as a result of the review of stock option grant practices undertaken by the Special Committee to the McAfee Board of Directors. The Special Committee found that none of the directors were complicit in or aware of these clerical errors relating to director grants. In several instances, the initial option grant date was reported improperly due to clerical errors; and the error was compounded with the automatic granting of stock options each subsequent anniversary date of election to the Board pursuant to McAfee's equity incentive plans. Accordingly, these director option grants were amended with the consent of each affected director to reflect the proper grant date and exercise price. The amendments are summarized in the table below.
Original Original Revised Revised
Director Shares Grant Date Price Grant Date Price
Leslie Denend 20,000 05/15/02 $20.80 06/14/02 $19.72
Leslie Denend 20,000 05/15/03 $12.41 06/13/03 $12.92
Leslie Denend 25,000 05/14/04 $16.80 06/14/04 $16.84
Leslie Denend 25,000 05/13/05 $24.91 06/14/05 $26.50
Leslie Denend 20,000 05/15/06 $25.58 06/14/06 $22.30
Denis O'Leary 45,000 07/17/03 $11.83 07/15/03 $14.60
Denis O'Leary 25,000 07/16/04 $16.75 07/15/04 $16.92
Denis O'Leary 20,000 07/17/06 $23.00 07/14/06 $23.15
Liane Wilson 45,000 04/10/02 $22.15 04/09/02 $22.50
Liane Wilson 20,000 04/10/03 $10.80 04/09/03 $13.34
Liane Wilson 20,000 04/10/06 $24.67 04/07/06 $24.56
Forward-Looking Statements: This press release contains forward-looking statements regarding additional measurement date and strike price changes that McAfee expects to make as a result of its stock option review and pending restatement. These forward-looking statements are subject to risks and uncertainties and actual results could vary, perhaps materially, from those anticipated. These risks and uncertainties include that McAfee may not make additional measurement date or strike price changes or that the magnitude of any such changes may be substantially different from what McAfee currently anticipates. The forward-looking statements contained in this report are also subject to other risks and uncertainties, including those more fully described in McAfee's filings with the SEC including its annual report on Form 10-K for the year ended December 31, 2005, and its quarterly report for the first quarter of 2006 filed on Form 10-Q.
About McAfee, Inc.
McAfee Inc., the leading dedicated security technology company, headquartered in Santa Clara, California, delivers proactive and proven solutions and services that secure systems and networks around the world. With its unmatched security expertise and commitment to innovation, McAfee empowers home users, businesses, the public sector, and service providers with the ability to block attacks, prevent disruptions, and continuously track and improve their security. http://www.mcafee.com/.
NOTE: All product and company names herein may be trademarks of their respective owners. McAfee, VirusScan, AntiSpyware and Avert are registered trademarks of McAfee, Inc. and/or its affiliates in the US and/or other countries. McAfee Red in connection with security is distinctive of McAfee brand products. All other registered and unregistered trademarks herein are the sole property of their respective owners.
