Managers and employees of the top Israeli public high-tech and pharmaceutical companies exercised options for shares at a profit of $4.5 billion (NIS 20 billion) over the past decade, according to the first study of its kind, carried out by “Globes”. The 20 companies in the study currently employ 50,000 people, including almost 20,000 Israelis.
Top executives and mid-level managers at Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA), Check Point Software Technologies Ltd. (Nasdaq: CHKP), Comverse Technology Inc. (Nasdaq: CMVT), Mercury Interactive Corp. (Pink Sheets:MERQ), and NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE) have become millionaires. Many of these managers are anonymous and are unknown to the readers of the business press.
In contrast to companies listed on the Tel Aviv Stock Exchange (TASE), it is hard to know who received what at most Israeli companies listed on Wall Street. Absurdly, the level of disclosure among non-US companies listed on Wall Street is considered less open.
Internet security giant Check Point tops the list: over the past decade, its employees have exercised options for shares at a huge profit of $1.35 billion (NIS 6 billion). Check Point is an excellent example of a company that went from start-up to industry leader in under a decade, while turning its managers into millionaires.
Check Point currently has 1,400 employees, more than 40% of whom are Israelis. The “Globes” study found that most of the options benefit was recorded in 2000, when 7.6 million options were exercised at a strike price, adjusted for stock splits, of $3.25 per share. Check Point was traded at an average share price of $75 in 2000, which means that the benefit accrued from the exercise of options was $500 million. Employees exercised an additional $340 million worth of options during 2001, for a total of almost $900 million over two years, two-thirds of the total benefit over the past decade.
Comverse is in second place. The options scandal at the company forced chairman and CEO Kobi Alexander to resign. Over the past decade, Comverse managers and employees exercised options for a profit of almost $1 billion. Like Check Point, about half this total was exercised in 2000, when options for seven million shares were exercised at an average strike price of $14.50 per share. Comverse was traded at an average price of $95 per share in 2000.
Mercury Interactive is in third place. Mercury is also ensnared in an options scandal, which forced CEO Amnon Landan to resign. Over the past decade, Mercury managers and employees exercised options at a profit of $614 million, 40% of which was recorded in 2000.
Generic drug giant Teva, the Israeli company with the highest market cap, is in fourth place. Company managers and employees have exercised options at a profit of $490 million, a fairly modest figure relative to the company’s market cap.
Managers and employees at Amdocs Ltd. (NYSE: DOX), which has two-three times as many employees as Comverse, exercised options at a profit of $236 million.
Published by Globes [online], Israel business news - www.globes.co.il - on June 4, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006