Robert L. Allbritton exercised options to buy nearly 1 million shares of Riggs National Corp. Friday, three days before resigning as chairman and chief executive of the company.
Allbritton realized $5.8 million in value by buying the stock from Riggs at prices below its current market value, according to a disclosure statement Allbritton filed with the Securities and Exchange Commission yesterday afternoon. Most of the options were awarded in 2001, 2002 and 2003, when Riggs stock was trading at less than $15 a share. An option is a right to buy a stock at the price on the date the option is granted, allowing the recipient to make money on it if a stock price rises over time.
Robert L. Allbritton resigned from Riggs Monday.
(Katherine Frey For The Washington Post)
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Riggs National Corp.
For a quick overview of Riggs Bank's legal problems, the status of various investigations and more, check out a Riggs primer compiled by washingtonpost.com.
Riggs closed yesterday at $19.73. PNC Financial Services Group Inc. agreed to pay $20 a share in its merger deal with Riggs, which is slated to close this spring.
Executive option grants are a standard feature of chief executive compensation packages. They usually become exercisable in installments, typically over a three- to five-year period, but all of the 985,000 options Riggs's board granted Allbritton as chief executive became exercisable immediately after they were granted. In contrast, other Riggs executives granted options had to wait three years before they could exercise all their option awards.
Allbritton did not sell any of the shares acquired in the option exercises.
The transactions converted all of Allbritton's options awarded during his four years as chief executive into company stock. Allbritton could have exercised them at any time, according to Riggs's SEC filings. But if he had not exercised them before Riggs's planned merger, PNC would have paid cash for them.
A source close to the Allbritton family who spoke on condition of anonymity because he had not been given the family's permission to speak on the record said Allbritton wanted to "clear the books and end all the official links with the bank. In financial terms it was virtually identical to waiting until the PNC deal was done."
Separately, Riggs allowed another day to pass without any official response to Allbritton's resignation.
Allbritton submitted his resignation Monday afternoon, but efforts to orchestrate the public release of the resignation between him and the company fell apart when directors of both the holding company and its main subsidiary, Riggs Bank, could not agree on the language used to publicly acknowledge Allbritton's contributions to the company, according to sources familiar with the matter who spoke on the condition they remain anonymous because the board's discussions are confidential.
Allbritton was chairman and chief executive of the District-based holding company, as well as chairman of Riggs Bank. The sources said he resigned on his own initiative without being asked to leave by any board members, although several independent directors and Riggs's federal regulator had expressed concern that Allbritton was spending most of his time in his role as chief executive of Allbritton Communications Co., the family-owned chain of television stations. In addition to his large option grants, Allbritton was awarded cash and bonus payments of $443,269 in 2002 and $541,360 in 2003, the last year for which his compensation data is available.
"When and if Riggs has a statement to issue, it will do so," spokesman Mark N. Hendrix said.
Unless it asks for a special extension, Riggs must file its annual report with the Securities and Exchange Commission by March 15. To provide the required signatures on that report, the company must have someone acting in the capacity of chief executive.
Allbritton's resignation came after a year of scandal at Riggs Bank, which pleaded guilty in January to one felony count of failing to prevent possible money laundering by former Chilean dictator Augusto Pinochet and officials of the West African oil state of Equatorial Guinea. Riggs has paid $49 million in criminal and civil fines for its anti-money-laundering lapses. Robert Allbritton and his father, former chairman and chief executive Joe L. Allbritton, personally agreed to pay $1 million last month to settle a Spanish criminal action over Riggs's dealing with Pinochet. The Allbrittons control almost 40 percent of Riggs stock.