United Therapeutics Execs Profit While Stock Slides

United Therapeutics(UTHR Quote) has devised its own financial bailout plan -- except the only beneficiaries are the company's executives.

Last week, United Therapeutics changed the terms of stock option grants to certain executives, allowing them to reap profits despite a steep plunge in the company's stock price.

Shares of the Silver Springs, Md.-based drugmaker sank 35% on Nov. 17 after the company announced that an oral version of its lung-disease drug Remodulin failed to achieve its primary endpoint in a pivotal phase III study.

The company's stock has remained depressed ever since, closing Wednesday at $52.01 -- a 56% decline from the company's 52-week high reached at the end of July.

One week later, on Nov. 24, directors on the compensation committee of United Therapeutics approved a plan to lower the strike price on existing option grants to certain executives and employees of the company.

These options were granted originally to link the interests of executives with those of the company's shareholders and to provide a financial incentive for the executives to achieve superior performance, the company stated.

However, that link was essentially broken when the exercise price of the stock option grants was lowered. United Therapeutics shareholders lost millions of dollars when the price of their shares fell in November. Instead of sharing in that loss, company executives were rewarded with cheaper stock options.

In June and September, more than 454,000 options in total were granted to President Roger Jeffs, Executive Vice President Paul Mahon and Chief Financial Officer John Ferrari at exercise prices of $94.06 and $109.64.