Our confusion over Lions Gate’s managenment handing out stock options at “financially inadequate prices” was quoted by Carl Icahn in a Letter to Lions Gate Shareholders.

Incidentally, if the Board really believed that our original $6.00 per share offer price was “financially inadequate” and that the true fair market value of the shares was $8.70, as Lions Gate implied again on April 13, 2010 in a letter to its employees, how were the directors able to conclude that it was fair to all shareholders for the Board to issue stock appreciation rights (SARs) to management at “inadequate prices”? According to Lions Gate’s latest Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on February 9, 2010, Lions Gate issued 700,000 SARs on April 6, 2009 with an exercise price of $5.17. Our confusion is shared by this commentator, who stated: “So, we’re just a little confused here. LGF’s Board, on one hand, claims that the share price is trading well below its ‘real’ value. Yet, at the same time, they have no problem selling part of the business to management at “financially inadequate” prices through stock options.”

Icahn’s letter sources the Seeking Alpha version of our post which can be found here.