In their research update of October 11, 2013, a very respected brokerage and research powerhouse, Sanford Bernstein, had this theory about the lack of clarity in Micron Technology (MU) fourth quarter earnings report:
Interestingly, Micron typically sets option pricing about a week after FQ4 earnings. Key executives' compensation was heavily skewed towards stock in FY 2012. RSUs and options are struck right after the board meeting following FQ4 earnings, which could explain lack of clarity on Elpida at this stage.
Now it seems that the board meeting and the option and share grants are behind us. A blizzard of Form 4's appears on the company's website detailing the new grants, which occurred on October 16:
The Form 4's do detail some shares foregone for failure to achieve some milestones. These are the new grants issued on October 16.
My purpose here is not to sermonize on the level of options grants, but to point out that they are now done at a price just below $17. Indeed a check of Micron's proxy statement indicates it has about 7% of its outstanding shares devoted to incentive compensation. SanDisk's (SNDK) proxy indicates they have about 10% earmarked. It's tough to be precise with these numbers since proxy statements are dated and we won't know the total numbers of grants until the next proxy statement is issued.
Conclusion. If Sanford Bernstein is correct that management may have been more focused on getting these grants done than delivering a crystal clear 4Q earnings report, at least it is now done. Management has 1.4 million new reasons (these share grants) to let the light shine on the wonderful Elpida acquisition, to acknowledge the October DRAM contract price rise of 6%, and to get out and tell the story. I'm delighted to see that Investor Relations has 7 events posted for November. No doubt we will have to read the transcripts of all 7 to connect the dots, but no doubt interesting dots will be presented.