Cognex makes tender offer for underwater options

AP News
Posted: Nov 16, 2009 5:58 PM

Cognex Corp., which makes mechanical vision sensors, on Monday announced a cash tender offer for some underwater stock options held by certain employees, officers and directors.

The company, based in Natick, Mass., could pay up to $9.6 million and incur a charge of $900,000 if all options are tendered and accepted. Stock options that are under water have no value to the holder because the exercise, or strike, price is higher than the current market value of the underlying stock.

CEO Robert Shillman said the company was making the offer to make up for the drop in the value of the options due to the ailing economy. He said the company's compensation is tilted toward options since it pays less salary and bonuses than competitors.

The options must have an exercise price of $23 or higher, which is 29 percent higher than the 52-week high before the start of the offer.

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Cognex said there were about 5.3 million options eligible for the tender offer. If all those shares are tendered, the number of outstanding options would fall by 54 percent.

The offer is scheduled to expire Dec. 15.

Cognex shares fell 5 cents to $17.93 in after-hours trading Monday after closing at $17.98, up nearly 6 percent from a day earlier.