This excerpt taken from the MCRL DEF 14A filed Apr 13, 2009.
Like many companies, we have experienced a significant decline in our stock price over the last year in light of the current global financial and economic crisis. Despite our successful reduction in operating expenses, as consumers began to conserve cash in late 2008 in response to the global financial and economic crisis, orders for our products fell and our stock price significantly declined. As a result, a considerable number of our employees hold stock options with exercise prices significantly above the recent trading prices of our common stock. The market for key employees remains extremely competitive, notwithstanding the current economic turmoil.
Because of the continued challenging economic environment and continued weak consumer demand, we believe these underwater stock options are no longer effective as incentives to motivate and retain our employees. We believe that employees perceive that these options have little or no value. In addition, although these stock options are not likely to be exercised as long as our stock price is lower than the applicable exercise price, they will remain on our books with the potential to dilute shareholders interests for up to the full term of the options, while delivering little or no retentive or incentive value, unless they are surrendered or cancelled.
The objective of our equity incentive programs has been, and continues to be, to link the personal interests of equity incentive plan participants to those of our shareholders. We believe that, if approved by our shareholders, the option exchange would be an important component in our efforts to: