Atlanta, GA, June 16, 2006--Home Depot said Friday that an internal probe into its stock-option expensing back to 1996 turned up five instances of re-pricing, accounting for some $10 million of unrecorded expenses.
Of those, three were retroactively priced lower, while two were re-priced higher. Home Depot said, however, that it doesn't believe the unrecorded expense is material enough to restate financial results.
In a statement, the company said that the five cases occurred before December 2000 in which the date of the meeting or resolution approving the grant was later than the date used to determine the exercise price.
David Sandor, a spokesman for the company, said that about 65 option grants were authorized during that period. Of the five that were re-priced, none were awarded to the company's founders--who were heading up operations at that time--or to board members.
Robert Nardelli, whose enormous pay package has been under fire, didn't join the company as chief executive until 2000.
Sandor said that the three that were re-priced lower were granted on three different dates in 1999 and 2000, totaling just fewer than 2 million options. Of those, only 50,000 have been exercised.
Over that two-year period, shares of Home Depot were valued, on average, at about $43 each. However, from November of 1999 until May of 2000, they were trading in the high $50s to the high $60s, peaking at $70.
Considering that the share prices have not risen above $45 since May of 2002, it's likely that most of those unexercised 1.5 million shares have been in the money for some time.
