November 13, 2002

NetIQ Announces Stock Option Exchange Program for Employees

NetIQ Corp. (Nasdaq: NTIQ), a leading provider of Systems Management, Security Management and Web Analytics solutions, today announced that its Board of Directors has approved a voluntary stock option exchange program for its employees. All current employees are eligible except the chief executive officer, chief financial officer, chief operating officer and chief technology officer.


Press Release

SAN JOSE, Calif.

NetIQ Corp. (Nasdaq: NTIQ), a leading provider of Systems Management, Security Management and Web Analytics solutions, today announced that its Board of Directors has approved a voluntary stock option exchange program for its employees. All current employees are eligible except the chief executive officer, chief financial officer, chief operating officer and chief technology officer.

Under the program, NetIQ employees will be given the opportunity to tender for cancellation stock options previously granted under NetIQ employee stock option plans for new options that are expected to be issued on a date at least six months plus one day from the date of cancellation of the tendered options. For options to purchase shares at prices of $24.00 or less, program participants will receive new options to purchase 1 share of common stock for every share subject to the option tendered. For options to purchase shares at prices greater than $24.00 and less than $30.00, program participants will receive new options to purchase 2 shares of common stock for every 3 shares subject to the options tendered. And, for options to purchase shares at prices greater than or equal to $30.00, program participants will receive new options to purchase 1 share of common stock for every 2 shares subject to options tendered. Any fractional share will be rounded down to the nearest whole share. In addition, 50% of the tendered shares recaptured as a result of the exchange ratios will be retired from the option plans, rather than being available for future re-issuance under the plans.

"We have worked to structure this program in a manner intended to enhance shareholder value," said Chuck Boesenberg, president and CEO of NetIQ. "Employees are the most important asset of NetIQ and key factors in helping us serve our customers and achieve our long-term goals. This program balances our need to retain and reward our employees and our obligation to be responsible to all our shareholders in a number of ways, including the retirement of 50% of the recaptured shares from our option plans."

Assuming that 70% of outstanding options are tendered in the offer, the incremental weighted average shares outstanding for purposes of calculating diluted earnings per share could increase as much as 2% as a result of the lower strike price of the new options. The Company further estimates that the shares removed from the plan will be approximately 2% of total shares outstanding, assuming 70% participation, resulting in lower dilution to shareholders over time.

The exchange program has been structured to comply with Financial Accounting Standards Board Interpretation No. 44; accordingly, there will be no financial statement charges associated with this exchange. To balance shareholder interests with those of the employees, several features were adopted in addition to the variable exchange ratios. New grants will vest over five years from the original date of grant of the tendered option, substantially shortening the original 7-10 year life of the options. To enhance employee retention, vested options under the new grants will not be exercisable for a period of six months after the new grant date. The exercise price of the new options will be the greater of the stock price on the date of cancellation or the stock price on date of the new grant. As of November 12, 2002, approximately 13.8 million options to purchase common shares of NetIQ Corporation were issued and outstanding.

About NetIQ

Founded in 1995, NetIQ Corp. (Nasdaq: NTIQ) is a leading provider of Systems Management, Security Management and Web Analytics solutions. Historically focused on the Windows management market, NetIQ now delivers cross-platform solutions that enhance business performance resulting in higher returns on infrastructure and Web investments. NetIQ products are sold across all continents directly and through a network of authorized NetIQ partners and resellers. The company is headquartered in San Jose, Calif., with development and operational personnel in Houston, Texas; Raleigh, N.C.; Bellevue, Wash.; and Portland, Ore. For more information, please visit NetIQ's Web site at www.netiq.com or call (888) 323-6768.

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Amy Sachrison
Director
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