September 30, 2003

More Underwater Options for Cash

Following the Microsoft trend, Martha Stewart Living Omnimedia plans to offer officers the right to exchange underwater options for restricted stock – and also has a separate offer to other eligible employees to exchange underwater options for a special cash bonus right. Officers are not entitled to participate in the cash offer and vice versa.

Martha Stewart filed two related Schedule TOs on September 25th, one for eligible employees and the other for officers.

At the upcoming NASPP conference in Orlando on October 15-18, this trend to offer employees cash for underwater options will be the subject of several panels – register now for the conference!

Schering-Plough’s Regulation FD Action

For subscribers, we have posted an interview with Dave Matheson of Perkins Coie LLP on the SEC’s Schering-Plough FD Enforcement Action.

SEC Releases Hedge Fund Study

Yesterday, the SEC issued its Staff Report on Hedge Funds. From this 134 page pdf file, the following are the most significant Staff recommendations:

– consider requiring hedge fund advisers to register as investment advisers under the Advisers Act, taking into account whether the benefits outweigh the burdens of registration.

– address certain valuation and fee disclosure issues relating to registered funds of hedge funds.

– consider permitting general solicitation in fund offerings limited to qualified purchasers.