Summary of Accelerated Vesting of Stock Options for PharmaNet, Inc. Executives
PharmaNet, Inc.'s Compensation Committee accelerated the vesting of certain stock options previously granted to key executives, including President and CEO Jeffrey P. McMullen. Originally set to vest in 2006 and 2007, these options are now fully vested as of August 11, 2005. Executives agreed not to sell shares acquired from these options before the original vesting dates, except to cover the exercise price. The acceleration was intended to avoid future compensation expenses under new accounting rules, with no immediate accounting charge resulting from this action.
Exhibit 10.1
Summary of
Accelerated Vesting of Certain Options
On August 11, 2005, our Compensation Committee accelerated the vesting of 220,000 out-of-the-money stock options exercisable at $40.39 per share and 243,975 out-of-the-money stock options exercisable at $44.43 per share.
The options were issued to key PharmaNet, Inc. executives in December 2004. 103,800 of the stock options exercisable at $44.43 per share are held by Mr. Jeffrey P. McMullen, who is the president and chief executive officer of PharmaNet. Mr. McMullen is also one of our executive officers and serves on our board of directors. One half of the options described above were to have vested in 2006 and the remainder were to have vested in 2007, subject to continued employment on each vesting date. In addition, each executive has agreed not to sell any shares of common stock issued as the result of options exercised prior to the original applicable vesting dates except to the extent necessary to pay SFBC the exercise price.
The primary purpose of the accelerated vesting was to eliminate future compensation expense the Company would otherwise recognize in its consolidated statement of operations with respect to these accelerated options upon the adoption of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment.
The acceleration of the vesting of these options did not result in a charge based on accounting principles generally accepted in the United States.
