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The circle of life

The very first post that I did for footnoted — back in Aug. 2003 — talked about how some companies were repricing stock options that were underwater, and thus, not really worth much of anything. So some companies, as I noted in that post, simply repriced them to make them valuable again.

Of course, 2003 was a very different market than today, with many stocks doing unusually well and the S&P 500 up 10% for the first three months of 2024. Still, there are a few companies that have not done as well, and as I found in this filing made by Guardant Health late last Friday, the practice of repricing is still in effect.

Friday’s filing terminates an agreement made back in May 2020 that would “pay” Guardant’s co-CEOs — each of whom is only paid $1 in actual salary — in PSUs. Specifically, each executive was given 1.7 million PSUs. But those PSUs only vested if the stock stayed above $120, $150 and $200. The stock briefly hit that in the spring of 2021, but has not traded above $120 since Sept. 2021. On Thursday, it closed at just over $20.

Under the new agreement, the two executives will receive annual awards worth $800K and additional long-term awards worth $5m. Unlike the prior agreement, these grants are not tied to the stock reaching a specific price.

Just another example of moving the goal posts when they don’t suit your purposes. Or the circle of life. Take your pick!