Ex-Iomega CEO weighs options
Kim Edwards, who resigned, may have a hefty exit bonus coming his way: millions more shares of company stock.
This would come on top of the nearly $13 million in stock that Edwards sold in November, his first stock sale since joining the company. As reported, the executive sold the shares to diversify his portfolio and to buy a second home, company spokeswoman Susan Stillings said.
At the end 1997, Edwards had nearly 3 million shares that were to be exercisable 60 days after January 31, or just days from today. According to company policy, after termination of employment the individual has 90 days to exercise his or her options that were vested at the time of termination.
That chunk of 3 million shares does not vest, however, for a few more days.
It is too early to tell if those shares would vest upon Edwards's departure, said Tyler Thatcher, a Iomega investor relations spokesman. "[The board of directors] could decide to reward those shares for service. The way the plan is now, he won't get them, but that is definitely negotiable."
During last year, Edwards exercised 949,000 options, realizing $12.8 million during the year, based on the fair market value of the stock at the time of exercise minus the option exercise price, according to a company filing with the Securities and Exchange Commission.
The filing also said that Edwards's salary in 1997 was $450,000 and that his yearly bonus was $641,800, granted based on net after-tax profits. That was up from a 1996 salary of $402,288 and a bonus of $636,640.
During the year, the after-tax profits increased each period from 9 cents, 10 cents, 11 cents, and 14 cents, respectively.
The company's stock did not appreciate along with the profits. It traded as high as 16-3/4 during November, dropping 25 percent, to 12-7/16, by the end of the year. The stock has continued to slide since then, falling more than 40 percent, to close at 7 today.
Despite the drop during the last month of the year, Iomega shares appreciated more than 90 percent in 1997. The stock started the year at 8-11/16.
At year's end, Edwards had an additional 2.2 million exercisable shares.
The proxy was filed days before the company's disclosure that it would miss analyst expectations for the March quarter. Stillings said that the timing of the two pieces of news was strictly a coincidence.
The sell-off represented about 14 percent of Edwards's total holdings and marked the first time that the CEO sold Iomega stock since he joined the company, she added.
Edwards will be replaced temporarily by James Sierk, an Iomega director. Iomega chairman David Dunn said Edwards has been "directly responsible for Iomega's success during the past four years."