Tellabs Danish Shares Get Sticky

Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) is facing legal challenge from former staff who claim the equipment vendor has illegally revoked their stock options.

Tellabs says it's done everything legally, and that some stock options simply expired when employees did not exercise them within three months upon their exit from the company.

But the employees appear ready to make a legal stink, citing recent changes to Danish law. A former employee, who wishes to remain anonymous, says a group of about 150 former Tellabs Denmark staff, including some of the 250 or so staff made redundant from the business during the past two years or so, have hired a lawyer to deal with their situation (see Headcount: Mama Mia!).

He claims that Tellabs, without any notification or warning, has cleared former employees' brokerage accounts of stock options awarded to them during their time with the vendor, a move that is now against the law in Denmark following a Supreme Court decision and changes in Danish legislation made in July this year. The total amount under dispute is "about $1 million" at the current share price, according to the former employee.

He says former staff who contacted Tellabs Denmark about the issue were referred to the vendor's corporate legal department in Illinois, but were not provided with a name or any specific contact details.

The employee says that the remaining Tellabs Denmark staff (about 115 employees) were addressed by the company's CFO Tim Wiggins earlier this week, where they were told that no more stock options would be awarded.

Tellabs claims it has done nothing wrong. In an email response to questions, Michael Smiley, VP and general manager at Tellabs Denmark, says all former staff have three months after their departure to exercise vested stock options, after which the options expire. As a result, stock options have not been withdrawn, but former employees may have found that their opportunity to exercise the options have expired.

Smiley writes that Tellabs is reviewing the issue of stock option expiration "due to recent changes in Danish law and a Danish Supreme Court decision, which affects all companies who offer stock options in Denmark... We plan to introduce a solution that complies with the terms of Tellabs’ employee stock option plans, U.S. Law, and Danish Law."

Tellabs denies that it told current Tellabs Denmark staff that they're no longer eligible for stock options. Smiley writes: "We have explained to Danish employees that there are new constraints in Danish law with regards to stock options. Tellabs has informed staff that it is evaluating other solutions that comply with Danish and US laws."

He adds that Wiggins was "in Denmark as part of routine monthly internal meetings."

Interestingly enough, Tellabs stock today traded within $0.50 of a 52-week high, at $9.54. Many of the Denmark layoffs took place last spring, with the stock trading lower. It makes one wonder... might some employees have allowed their options to expire -- knowingly or unknowingly -- and then reconsidered at a higher share price?

Smiley says that Tellabs will do whatever it takes to resolve the issue legally:

"At this point I want you to know that Tellabs has always dealt fairly with its current and former employees and our policy is to comply with all local laws. As I am sure you recognize, Tellabs behavior in this regard has not and will not change. You should know that this new legislation is unprecedented and that finding a solution that complies with laws in both the U.S. and Denmark, and is fair to our former employees, is taking some time to complete. Nevertheless, we are working this issue and will shortly communicate a plan to our former employees."

As for the future of the Danish operations, which are focused on the vendor's 6300 next-generation SDH platform, Smiley says there are no plans to close down the business, and that "revenues and business are growing."

— Ray Le Maistre, International News Editor, Light Reading

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