This excerpt taken from the WDR 10-Q filed Apr 26, 2005.
9. Subsequent Event
On April 25, 2005, the Compensation Committee of the Board of Directors approved the acceleration of vesting of all unvested options to purchase common stock of the Company that were outstanding as of that date. This action resulted in the accelerated vesting of options to purchase 624,267 shares of common stock of the Company. Of these options, 447,497 were in-the-money options having an exercise price less than the then current market price of the Company's common stock and a weighted average exercise price of $13.90 per share. While early vesting of in-the-money options triggers remeasurement of compensation cost under current accounting standards, the Company anticipates that all in-the-money option holders will remain employed with the Company throughout the original vesting term of such options, and therefore, in accordance with existing accounting standards, no expense will be recorded for these options, unless option holders are able to exercise an option that would have expired unexercisable pursuant to its original terms. Pro forma disclosures in the footnotes to the consolidated financial statements will include the impact of early vesting of options in the second quarter of 2005 and will result in an approximate $1.9 million pre-tax charge to pro forma earnings.
In order to limit unintended personal benefits to directors and executive officers receiving accelerated vesting of options, the Compensation Committee required that each such director and executive officer agree not to dispose of any shares of common stock obtained upon exercise of the accelerated options until such time as the options would otherwise have vested, other than dispositions of stock in payment for the exercise price of options and associated taxes, if any.
The Company is accelerating these options because it believes it is in the best interest of the stockholders to reduce future compensation expense that the Company would otherwise be required to report in its income statement upon adoption of Statement of Financial Accounting Standards No. 123, Share-Based Payment, (revised 2004) (SFAS No. 123R) in the first quarter of 2006. SFAS No. 123R will require that compensation expense associated with stock options be recognized in the Companys income statement, rather than as pro forma disclosures in the footnotes to the consolidated financial statements.