Accounting & Tax

Stock Options Eyed at Defense Contractor

Over a five-year stretch between 1998 and 2003, grant dates for stock option awards often preceded the dates of formal approval by the compensation...
Stephen TaubMarch 15, 2007

L-3 Communications Holdings disclosed that the Securities and Exchange Commission has requested certain information regarding its historical practices for granting stock options.

The defense contractor, which has a market capitalization of about $10 billion, stated in a regulatory filing that will continue to cooperate fully with the commission but provided no other details.

Last July, L-3 disclosed in a regulatory filing that on occasions from May 1998 through July 2003, the grant date and accounting measurement date for stock option awards preceded the date of formal approval by the compensation committee, and in many cases preceded the date that proposed grants were submitted for approval.

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L-3 added that the price of the company’s stock on the grant and accounting measurement date was generally less than the price on the approval date.

The filing also indicated that in 1998, the accounting measurement dates for grants to one future employee and employees of three acquired businesses were the dates of the unanimous written consent and not the hire date or the acquisition dates, which were later.

L-3 recently appointed Ralph D’Ambrosio as chief financial officer. That position was previously held by Michael Strianese, who took over as president and chief executive officer following the death of Frank C. Lanza.