Codemasters (CDM) is best known for its racing simulators, such as Formula 1 and Dirt, but it also develops and publishes many others. On 23rd November, it announced that Lisa Thomas, recently squeezed out from being the chief brand officer of Virgin by a management restructuring, was being granted an option over 210,000 ordinary shares.
The option was granted “in accordance with the terms of her appointment earlier this year”. 7 April, to be precise. That was when she landed as a non-executive director at Codemasters. But what struck many as odd was the timing. Just two weeks before the date of her option, she and its other directors had recommended a takeover bid from (Take-Two Interactive US:TTWO).
Best practice requires the cost to participants of market-based options to be set at, or above, the prevailing share price. Codemasters' share price had closed at 247.5p on 6 April, and 272p on 7 April; the offer price – that Ms Thomas has to pay to buy the shares – is 235p. That would have given her an immediate paper gain of almost £80,000 on the day she took up her role. But these options weren’t granted then. They were granted on 23 November. With the bid, the shares had reached £5, but the cost to her was back-dated. Her immediate gain? A notional £556,500. A company spokesperson conceded that “the timing’s not great”.