Allen's Undisclosed Stock Options Were Worth Up to $1.1 Million

[swag]

http://www.bloomberg.com/apps/news?pid=20601103&sid=aMTFur4YOYEs&refer=news

Oct. 10 (Bloomberg) -- Stock options that Senator George Allen described as worthless were worth as much as $1.1 million at one point, according to a review of Senate disclosure forms and U.S. Securities and Exchange Commission filings.

The records appear to contradict remarks he made to the Associated Press. ``I got paid in stock options which were worthless,'' AP quoted him as saying.

Allen served as a board member of Chantilly, Virginia-based Xybernaut Corp. from 1998 until December 2000 and was awarded options on 110,000 shares during that period. His Senate financial disclosure form for 1999, required for candidates as well as officeholders, doesn't report that he owned the options.
. . .

``In an election season in which congressional ethics and morality are at the top of public discussion, Allen may now be seen by much of the public as part of a larger problem afflicting his party,'' {GMU Public Policy Professor Mark} Rozell said.
. . .

Allen wrote a letter to the U.S. Army on Xybernaut's behalf in December 2001, AP reported, citing John Reid, Allen's spokesman, who told AP he wouldn't disclose the contents of the letter. In September 2003 the U.S. Defense Department announced $2.13 million in contracts to buy the company's wearable computers.
. . .

[Rose Siding]

1. I don't know which is worse

To lie about the value of the stock, or to consider a million bucks "worthless". Most US families could do an awful lot with a million dollars.

[babylonsister]

2. And WHY isn't this story being blasted all over the news? I hope

Webb at least is drawing lots of attention to yet another Allen fubar.

[northzax]

3. well, the question is, what are they worth now?

sure, at one point they were worth a million bucks, but what did he exercise them for, if in fact he did? I have a nice certificate on my wall, granting me the right to purchase a thousand shares of Lucent at $40, the day it was issued to me it was worth, on paper, $22,000. The day I was able to use them? underwater. worth less than zero. but it makes nice art.

[Lurking Dem]

4. A lot of questions here

Stock options aren't worth anything unless you exercise them. What was the vesting period? What was/is the expiration date?

A stock being worth $x at a given period of time doesn't mean anything if the window to exercise the options wasn't open.

They need to do some major digging on this story.

[northzax]

5. the article explains a lot of it

he was granted 60,000 shares in 1999 and 50,000 in 2000. if he had exercised them when he left the company, they would have been worth about $1,300. money, but not a LOT of money. there is a bit of confusion about when they expired, the attorney says 90 days after he left the firm (or March 01) but he reported owning them in 2001 and 2002. the original options started to expire in 2008 (since the company is bankrupt and trading at half a cent per share today, they are, in fact, worthless.)

so this really is a tempest in a teapot. At one point they were worth money, but, like so many other people's investments, now they are not.

[Lurking Dem]

6. The big question to me

is when were the windows? I admit to a hasty, undercaffeinated reading of the OP. But unexercised options are worth the paper they are printed on.

The only reason to report "owning" options is if the are exercised and not sold. Which would be held shares of stock, not "options".

I am very confused.

[northzax]

7. different standard of reporting

remember, these weren't tax returns we're talking about, they were government financial disclosure forms, where you have to report unexercised, but still viable, options as a potential asset (and as a conflict of interest disclosure)and, of course, they are reported to the SEC by companies when they are initially granted.

it looks like the window was 99-08 for the first set, and 2000-09 for the second.

[Lurking Dem]

10. Thanks!

That makes sense.

[onenote]

8. it doesn't matter whether they were worth $1 million or one cent

First of all, focusing on the fact that they were once worth $over $1 million is silly since the point in time at which they were worth over $1 million was before Allen was elected to the Senate.

Second, it doesn't matter whether they are worth $1 million or nothing at any given time during his term of office. The reason that they needed to be disclosed is because they represent a financial interest that might influence his voting. If they're worth nothing now, the concern would be that he might be tempted to pursue policies that would cause them to increase in value. If they were worth a lot -- same concern -- he might try to keep the value up or increase it.

[K8-EEE]

13. Very true! Legislation could make "worthless" stock turn $$$$

You're supposed to disclose it, end of story!

[northzax]

17. he did disclose it

on his financial disclosure forms in 2001, 2002 and 2003. read the article.

the worthless quote is from this year.

Look, I think as little of George Allen as the next guy, but there's enough really crappy stuff in his background to hang him on for real, we don't need to stretch this much.

[gratuitous]

9. Allen, a public official, writes a letter to the Army, a public body

And we're not entitled to know what he wrote "on Xybernaut's behalf"? Oh yeah, I know that when my boss asks me what I said or wrote to a client I can safely say, "None of your beeswax," and the boss just lets it go at that.

[northzax]

11. well, technically

in December 2001 Allen wasn't a public figure yet, he was a Senator-Elect, not yet a Senator.

but I see your point.

[hedgehog]

14. On the other hand, if Allen wasn't a public figure,

why would the Army even bother opening any mail it got from him?

[gratuitous]

15. He was elected in November 2000

And sworn in as a Senator in January 2001. So he'd been on the job for 11 months when he wrote to the Army on behalf of his "worthless" friends at Xybernaut.

[northzax]

16. yes, good point, I had my dates wrong-

my bad, thanks for the correction.

and, of course, he said they paid him in worthless options a couple of months ago, when, in fact, they were worthless (and since they were never exercised, they were, in fact, worthless the entire time)

[progressoid]

12. Oh, you libruls. Stop whining about a few cents here and there.

[AllexxisF1]

18. These Stories Just Crack Me Up.

I lived in Northern Virginia for the majority of my life and only recently moved to southern Florida, and I for one am tickled pink this sleaze bag is screwing his whole political career.

Allen was going to be a serious heavy wieght for the Republican Party in the years to come, but he can forget that now :smoke:

This is one political career that is over.

[progressoid]

19. Hey - Welcome to DU AllexxisF1

[KittyWampus]

20. how many scandals can the GOP endure