Investment bank Merrill Lynch is among several US companies being targeted by labour unions over the award of executive share options made in the wake of the 9/11 terrorist attacks.
The companies made unusual grants of share options in the two weeks following 9/11, when the US stock market fell sharply. Since the market rebounded quickly, the timing of the grants made them considerably more valuable than if they had been awarded before the attacks. The AFL-CIO, the umbrella body for more than 50 American labour unions, has written to the companies concerned, including UnitedHealth Group, a healthcare provider, and Teradyne, which manufacturers testing equipment for the electronics industry, for an explanation of the grants. Dan Pedrotty, counsel of the office of investments at the AFL-CIO, said: "We're seeking an account from their compensation or governance committees as to whether the grants were made to exploit market lows following 9/11. We've been in discussions with some of these companies. We're concerned they may have been willing to profit from a national tragedy." Last month, The Wall Street Journal reported Merrill Lynch made a grant of more than 750,000 options to Stan O'Neal, then president and chief operating officer, on September 24, 2001, at an exercise price 15% below the pre-9/11 closing price. The award is now worth $4.5m (€3.5m) more than if it had been made on September 10. There is no indication Merrill timed the award to coincide with the aftermath of the attacks. Merrill said its board compensation committee had agreed in the summer of 2001 to make a one-off option award to O'Neal, which was formally made at the committee's next meeting, held on September 24. A spokesman said: "This was a special award linked to promotion, as is customary at Merrill. The events of 9/11 happened after the compensation committee met." Merrill did not comment on how it would respond to the AFL-CIO's request for a fuller explanation. Pedrotty said the union group wanted to see option grants replaced by performance shares awarded when executives met performance conditions.
