You are the head of administration for the employee stock option plans of a publicly traded company. The compensation committee of the company’s board of directors has developed, and the board has approved a schedule of annual option grants for employees at Grade 14 and above (for example, Grade 14 employees will receive an option for 1,000 shares, Grade 15 employees will receive an option for 1,500 shares, and so on). The options for calendar year 2008 for employees other than executive officers were granted by the CEO (a duly authorized individual) who signed a granting document on January 15, 2008, with an attached schedule of 1,357 recipients, their grade levels, and their grants, which totaled 3,127,666 shares. The list was compiled from lists supplied by the various regional managers as to employees qualifying for an option or other award and was cross-checked with the human resources department. Consistent with prior practice, the CEO did not personally check the attached list.
Of the 1,357 grants, only two differed from the compensation committee schedule for their grade level; both differences were due to unusual circumstances involving the particular employee (one of the grants had a higher number of shares than the schedule for the employee’s grade level, and the other had a lower number of shares). On January 25, 2008, you received an e-mail from a regional manager in a remote corner of the company informing you that one of the Grade 15 employees in his region was inadvertently left off the list he sent you in December and that the omitted employee should receive the standard grant of 1,500 shares. On January 25, 2008, the company’s stock was trading at $3 per share higher than its closing price on January 15, 2008. You have not yet sent the approval list to stock option administration for processing. What should you do?