View Full Version : Disney values $323M backdated Pixar options

04-10-2007, 12:12 PM
Disney values $323M backdated Pixar options

The media company offers to exchange backdated stock options given to the animation company's employees before it was bought out with higher-priced options, cash.

April 10 2007: 12:06 PM EDT

LOS ANGELES (Reuters) -- The Walt Disney Co. has offered to exchange $323million in backdated Pixar stock options issued to the animation company's employees before it was bought by Disney last year with higher-priced options and cash, according to a securities filing.

The filing, made late Monday, showed that backdating at Pixar was not confined to top executives, who were not included in the exchange offer.

The exchange applies only to unexercised options that had original exercise prices that were less than fair market value on the day they were issued. Disney said it will withhold taxes from the cash payments issued to participating employees.

Disney Chairman John Pepper revealed last month that Pixar had issued backdated options but said Disney would see no financial impact from it.

Disney purchased Pixar in May of 2006 in a $7.4 billion all-stock transaction.

Sanders Morris Harris analyst David Miller said the aggregate value of the backdated options "was generally within the range of what we thought would happen."

"I'm not really that concerned," Miller said. "I think that this is something that Disney will settle and this is something that will quickly go away."

The aggregate amount of $323 million, calculated under the Black-Scholes-Merton method for valuing options, assumes that all eligible options will be tendered under Disney's offer.

As of March 30, there were 15.5 million shares of Disney common stock, which was traded for Pixar shares after the 2006 acquisition, eligible for exchange, the filing said.

Shares of Disney (up $0.03 to $34.94) edged lower during midday trading on the New York Stock Exchange, while competitors News Corp. and Time Warner also edge lower.