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Old 7th Dec 2017, 9:08 am   #4
Radio Wrangler
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Join Date: Mar 2012
Location: Fife, Scotland, UK.
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Default Re: Broadcom/Avago/HP diodes and MMICs

It was a particularly sad event for those working there. If you did anything particularly good for HP, you'd get a number of stock options as a reward. This meant that a number of shares were put aside for you to buy any time in the following ten years, at the price of the day the options were granted. If the stock price went up, as it used to do quite steadily, you could make a fair bit of money. At worst, you did nothing and let them expire at the end of 10 years, so you lost nothing. It was an incentive for people to want the firm to be successful.

This scheme was controlled by a contract. If you retired, the options would continue up to 3 years into retirement subject to the 10 year overall limit. If you left the firm for any other reason, they expired. A form of 'golden handcuff' for people the company really wanted to keep.

So, one day in 1999 we all worked for HP and all was normal. The next day we all did the same jobs but the sign over the door had changed to Agilent, but silently and without any fuss, all our stock options had expired - we no longer worked for HP. There was certainly some fuss when this aspect was noticed!

Although we didn't lose money we'd actually received, and the amounts were uncertain, we'd lost a bonus that was expected to make individuals thousands of pounds. Nothing like the scale of these things in the banking sector, but very good ifor engineering.

Faced with discovering that all the high performers of their workforce had just been handed a massive disincentive, Agilent set up its own stock option scheme to replace the HP one. But the Agilent options were set at the current Agilent price (So growth of HP from option issue date to the split was lost) yet the expiry date of the Agilent options was set to the same as the expiry of the original HP options. Shortly after this in 2001 the dotcom bubble burst, the telecomms industry shrank and share prices collapsed. These new share options were fixed at around $80 per share to take up, and were worth about $12. I don't know of anyone who exercised them.

We still had our jobs and we still had the same salaries but with the shrinking market, jobs started to go. We'd taken voluntary pay cuts, which was how we'd handled ond survived previous down-turns, but this one was deeper and far longer.

To put it in perspective, friends at GEC-Marconi had it far worse.

David
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