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Home > Stock Options > Books >
August 2006. 150 pp. (6" x 9"), softcover. $25 for NCEO members; $35 for nonmembers.
The years between 2001 and 2005 were very busy ones for lawyers and consultants who work with equity compensation. Growing unease about the way stock options and other equity compensation plans had been used during the late 1990s and the first several years of the twenty-first century were reflected in major changes to accounting rules, equity plan disclosure requirements, and stock exchange rules. This volume, written by attorney Alisa J. Baker (author of The Stock Options Book) and NCEO Executive Director Corey Rosen, reviews and organizes significant case law and regulatory developments during those years. Part I, "Litigation Review," is organized in standard legal format with the aim of providing research assistance to the practitioner. Key court cases are summarized, with supporting (or contra) authorities noted as appropriate. Part II, "Recent Administrative Rulings and Regulations," is more narrative and covers agency rulings in a less formal way. All chapters are organized by subject matter, with most chapters providing a brief introduction and issue overview. Part III provides an alphabetical index to cases.
Preface
Introduction
Part I: Litigation Review
1. General Contract Interpretation and Implementation Issues
2. Equity Issues Related to Employment Disputes
3. Treatment of Equity in Corporate Transactions
4. Choice of Law Issues
5. Allocation of Equity Rights Under Family Law
6. Tax Litigation Arising from Equity Compensation Issues
Part II: Recent Administrative Rulings and Regulations
7. IRS Rulings on Equity Compensation
8. Final and Proposed Tax Regulations
9. Securities Law Legislation and Rulings
Part III: Table of Cases
Table of Cases
No right to exercise options when reasonable reliance on company misrepresentations could have been cured by reading accurate statements
In Vague v. Bank One Corporation, C.A. No.18741-NC (Del. Ch. Ct. 2003), reversed and remanded (Del. May 20, 2004), C.A. No. 18741-NC (Del. Ch. Ct. Feb 1, 2006), plaintiff Vague earned, through his employment with First USA, a predecessor of Bank One, the right to exercise two options to acquire Bank One stock. As a result of conversations that occurred in connection with his employment termination after the merger, Vague mistakenly believed he had a few extra years to exercise under the options, and so he failed to exercise until eight months after they had expired in August 2000. Bank One rejected his effort to exercise, and Vague sued in Delaware Chancery Court to compel Bank One to honor the exercise based on misrepresentation or equitable fraud. Initially, the trial court granted summary judgment to Bank One. On appeal to the Delaware Supreme Court, the case was reversed and remanded for a hearing on the issues. On remand, the trial court determined that misrepresentations were probably made, and that Vague could have reasonably relied on at least some of them. However, it concluded that Vague’s claim was undermined by the fact that two statements were sent to him before August 2000 that accurately showed the expiration date. Vague forwarded those statements, unopened, to his accountant and thus was unaware of the problem until it came to his attention in the context of his personal financial matters.
Held: On rehearing, judgment entered for Bank One. Although Vague earned and should have been entitled to exercise the options, he would in all likelihood have done so timely if he had read the accurate statements that were sent to him by Bank One prior to the expiration date. The fact that he did not does not save his misrepresentation claim.
Copyright © 2006 by The National Center for Employee Ownership (NCEO) (phone 510/208-1300; email nceo@nceo.org; WWW http://www.nceo.org/). All rights reserved.
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