Like some other plastics processors, Channel Commercial Corp. and AEP Industries Inc. have seen their stock prices drop - a lot.
Like other companies, that left many employees and executives with essentially worthless stock options.
Unlike many other companies, however, those firms decided to let executives and employees trade in their old options for new, potentially more lucrative ones.
Some corporate governance experts frown on that practice, at least for executives, because they say it erases any risk that's supposed to come with options. It can be acceptable for lower-level employees because they do not have as much control, said Charles Elson, director of the University of Delaware's Weinberg Center for Corporate Governance.
Companies say they sometimes have to reconfigure options because those that have lost any reasonable chance at being redeemed can no longer motivate employees.
AEP's top officers traded in more than 86,000 shares June 26, while lower-level officers and employees traded in 235,000. Officers at the South Hackensack, N.J., firm got back 56,000 in return, or 65 percent of their shares, and employees 188,000, or 80 percent.
AEP Executive Vice President Paul Feeney said he and Chairman J. Brendan Barba, who owns 15 percent of the company, were not allowed to surrender options: ``We didn't want to make this look like another management giveaway.''
Channell, in Temecula, Calif., decided in January to let employees and board members trade in more than 1.3 million options as a way to ``create better performance incentives for these option holders.'' Unlike AEP, it granted one new option for each old one, though.
About a month before Channell officials made that decision, two of the three members of its compensation committee resigned from the board. Company officials did not respond to interview requests.