Magazine article American Banker

CoreStates Axes Stock Options to Facilitate First Union Deal(Brief Article)

Magazine article American Banker

CoreStates Axes Stock Options to Facilitate First Union Deal(Brief Article)

Article excerpt

A group of CoreStates Financial Corp. executives who are slated to lose their jobs when the banking company is scheduled to merge with First Union Corp. in April have something else to gripe about: They will not be able to cash in their unvested stock options.

In a memorandum last month to stock option plan participants, CoreStates chairman and chief executive officer Terrence A. Larsen said the company needed to alter the option plan to preserve tax-free accounting treatment for the pending deal.

That means plan participants who quit or are fired from Nov. 17, 1997, when the deal was announced, to Dec. 31, 1998, will not get to cash in options that remained unvested as of the merger announcement date.

The change could affect 7% of CoreStates employees-all of them executives-who participate in the stock option plan, said spokeswoman Laurel O'Brien. That group totaled 1,340 of Philadelphia-based CoreStates' 19,114 employees at the end of 1997.

But it was unclear which executives would keep their jobs in the combined entity, which would choose to leave, and which would lose their jobs.

Last week Charlotte, N.C.-based First Union revealed its plan to cut 7,480 jobs in connection with the merger. Taking into account a promise of 3,000 hirings and an expected 16% attrition rate, First Union put net job losses at 1,300.

CoreStates has long offered its executives stock options for which the vesting, or exercise, date would automatically accelerate if the company were bought. …

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