As Metro-Goldwyn-Mayer completed its stock rights offering, which generated about $721 million for the company, a top official of Kirk Kerkorian’s Tracinda Group forfeited stock options that would have been worth more than $3 million when they vested on Friday.
Tracinda Group owns about 89% of MGM stock.
According to a filing with the Securities and Exchange Commission, Tracinda vice chairman Jerome York agreed last month to cancel options to buy 2 million shares of MGM at $14.90 per share.
York was given the stock options in February. According to a separate SEC filing, options to buy 400,000 shares were scheduled to vest on Friday and every subsequent Nov. 12 through 2003.
MGM stock closed Wednesday at $23.31 per share, meaning York’s options that would have vested Friday would have been worth $8.41 apiece.
Observers speculated that the option cancellation was part of an exit package for York, who may be preparing to step down from an active management role with Tracinda.
Meanwhile, MGM reported that 99.3% of its stockholders — including Tracinda — exercised their rights to buy additional stock at $14.50 per share.
Stockholders of record on Oct. 15 were allowed to buy one discounted share for every three shares they already owned.
The rights offering added 49.7 million MGM common stock shares, bringing its total common stock outstanding to about 201.3 million shares.