Opinion ID: 779792
Heading Depth: 3
Heading Rank: 1

Heading: Lucente's Restricted Stock and Stock Option Awards

Text: 6 During his tenure at IBM, Lucente participated in several incentive compensation plans, including the 1982 Variable Compensation Plan (the 1982 Plan) and the 1989 Long-Term Performance Plan (the 1989 Plan) (collectively, the Plans). Under these Plans, IBM awarded Lucente stock options and restricted stock as part of his compensation. These Plans, of course, were designed to retain key executives and to give them a proprietary interest in the company by linking their compensation to IBM's profitability and growth. For these reasons, both Plans contained forfeiture-for-competition provisions, permitting IBM to cancel an employee's unexercised stock options and restricted stock if he went to work for an IBM competitor after leaving IBM. The forfeiture provisions contained no limitations for time, place, or scope. Both Plans provided that New York law governs all determinations made under the Plans. 7 When he retired, Lucente had been awarded 12,283 shares of restricted stock (11,162 under the 1982 Plan and 1,121 under the 1989 Plan) as well as 126,739 stock options (under the 1989 Plan). Lucente's stock options were freely exercisable from the first anniversary of the date of the award until ten years after that date. IBM had awarded Lucente's options between May 1983 and January 1991 at exercise prices ranging between $96.69 and $159.50 per share. Thus, his options were set to expire at various dates between May 1993 and the end of January 2001. Lucente had not exercised any of his stock options prior to his retirement. 8 The restricted stock operated under a different timetable than his stock options. Under the Plans, an employee who retired would receive the stock out of escrow on the date of his retirement or on his sixtieth birthday, whichever came later. In 1993, however, IBM changed its Plan provisions so that the limitations on restricted stock awards would be lifted no later than one year after an employee's retirement, regardless of his age. When he retired in 1991 Lucente was not yet sixty, and therefore expected to receive his restricted stock award on his sixtieth birthday (January 1, 2000). (Under the 1993 revision, Lucente would have received his stock in the fall of 1993.)