Intersil Corp. (Milpitas, CA) announced that it has accelerated the vesting of unvested employee stock options granted to employees and officers that had exercise prices greater than $22. This acceleration does not include options that were granted over the past 12 months. As a result, options to purchase approximately 1.8 million shares became exercisable immediately. Options held by outside directors are excluded from the vesting acceleration. In addition, restrictions will be imposed upon the sale of any shares received through the exercise of accelerated options held by executive officers and certain other members of senior management.
The vesting acceleration enables Intersil to avoid recognizing in its income statement compensation expense associated with these options in future periods, upon adoption of FASB Statement NO. 123R in January 2006. As a result of this change, the company expects to reduce the after-tax stock option expense it otherwise would have been required to record by approximately $19.6 million over a three-year period. Approximately $11 million would be avoided in 2006.
"We believe that accelerating the option vesting will yield long-term benefits as the estimated expense associated with these options under the new accounting rules would have been significant over the next three years," stated Intersil CEO and President Rich Beyer. "We do not believe that this acceleration adversely impacts our ability to retain employees as there are still a significant number of unvested option grants, which are not vested that provide retention value for the future."
