NATICK, MA, USA November 16, 2009
Cognex Announces Cash Tender Offer for Certain Underwater Stock Options
NATICK, MA, November 16, 2009 — Cognex Corporation (NASDAQ: CGNX) today announced a cash tender offer for certain “underwater” stock options. The offer commenced today and will expire, unless otherwise extended by Cognex, at 5:00 p.m. eastern time on December 15, 2009.
The tender offer applies to all outstanding stock options held by eligible employees, officers and directors of Cognex having an exercise price equal to or greater than $23.00 per share, which is $5.13 or 29% above the 52-week high sale price of Cognex common stock preceding the start of the offer. As of today, there are 5,253,307 eligible options. If all of these options are tendered and accepted, the number of outstanding Cognex stock options would decrease by 54%.
“Our philosophy has always been to provide our employees with a level of cash compensation (salary plus bonus) that is somewhat lower than what other companies provide for high quality employees. Instead, we put more of the value of our compensation packages in the form of stock options, which we believe closely links the interests of our employees, officers and directors with those of our shareholders,” said Dr. Robert J. Shillman, the Chairman and Chief Executive Officer of Cognex. “By keeping salaries relatively low, we have kept a tight rein on our operating costs, but to make up for that, we have been rather generous with our stock options which, in the past, provided a sizeable upside to our employees during growth cycles in our business.”
“However, due to a number of factors in recent years having nothing to do with the efforts of our employees and directors, such as the recent precipitous downturn in the economy, the vast majority of our outstanding options are significantly “underwater” and have virtually no incentive or retention value,” Dr. Shillman continued. “We believe that providing this opportunity is consistent with the original intention of the stock option awards, which was to attract and retain smart, highly-educated employees and motivate them to work hard for the success of our company. In addition, this program could also significantly reduce the number of options outstanding.”
If all eligible options are tendered and accepted, the total cash paid by Cognex for these options will be approximately $9,600,000. Cognex expects to make the payment from available cash on hand.
Cognex will incur a pre-tax charge of up to approximately $900,000 upon the closing of the offer if all eligible options are tendered and accepted. This charge is primarily for the acceleration of the remaining unamortized stock-based compensation expense associated with the unvested portions of the eligible options.
This press release is for informational purposes only, and is not an offer to tender or the solicitation of an offer to tender any stock options for a cash payment. Cognex has filed a tender offer statement on Schedule TO with the Securities and Exchange Commission that includes copies of the related offering materials. These documents are available at no charge on the SEC’s website at www.sec.gov, as well as Cognex’s website. Each holder of eligible options should carefully read the tender offer materials, as they contain important information, including the various terms and conditions of the tender offer. Neither Cognex management nor its Board of Directors makes any recommendation in connection with the tender offer.
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