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webMethods announces stock option exchange for employees

Fairfax, VA  April 13, 2001  Stock options just ain't what they used to be.

Or rather, they are exactly what they used to be, at least in terms of their exercise price, and that's the problem. When your dot-com's stock soared in 1999, you were planning a beachfront property and wondering whether you could actually hire the real Martha Stewart to do your veranda in just the right shade of azure.

Now that the stock has tanked, your real estate plans have been beached and you're back to buying your Martha Stewart at Kmart like the rest of us.

Fortunately, some companies have taken note of their employee's plight and are taking steps to protect their employees' welfare, not to mention their options. Sort of a dot-communism for dot-commers.

For example, options in webMethods priced at $40 or more probably seemed like a good deal back when the company's share price hit $194 in July 2000. Since then, shares in the company, a business integration software provider, have fallen to less exuberant levels, hitting a 52-week low of $14.375 on April 5 before rebounding to about $26 more recently.

But under a voluntary stock option exchange program that the company's board of directors announced this week, webMethods employees have the opportunity to cancel outstanding stock options granted on or before March 31, 2001, that have an exercise price of $40.00 or more, in exchange for a new option grant of an equal number of shares.

The new options will be issued no earlier than six months and a day after the cancellation date but no later than December 31, 2001. The exercise price of the new options will be based on the fair market value of webMethods' common stock at the time of grant.

"The outlook for integration software continues to be strong and our employees are a critical factor in our continued corporate success," said Phillip Merrick, chairman and CEO of webMethods. "As webMethods has grown, we have successfully fostered a corporate culture focused on execution and professional success. This program illustrates our commitment to attracting and retaining our most valuable resource: our employees."

According to a statement from the company (and we quote): "the exchange program is being structured to comply with FASB Interpretation No. 44 'Accounting for Certain Transactions Involving Stock Compensation.'" Okay ... good ...

webMethods said it expects there to be no accounting charges to the company as a result of the stock option exchange program.

Founded in 1996, webMethods is headquartered in Fairfax, Va. The company counts more than 600 customers worldwide, including such big-leaguers as Citibank, Dell, Eastman Chemical, The Ford Motor Co., Grainger, Motorola and Starbucks.