Executives at leading US companies could make millions through the award of stock options issued in the weeks after the September 11 2001 terrorist attacks.

Nearly 200 US companies awarded options to their board members in the wake of the attacks when share prices were at historic lows, giving executives the chance to make millions of dollars later as values returned to normal levels.

Prominent companies including Black & Decker, Home Depot and United Health offered more than 500 executives stock options worth a total of $325m (£177m) in the last two weeks of September 2001.

Companies directly affected by the attacks, including Merrill Lynch, which lost three employees on September 11, offered stock to senior executives, according to a report in the Wall Street Journal.

On September 24, Merrill Lynch president Stanley O'Neal was granted the option to buy 750,000 shares at a price 15% lower than the level prior to the attacks. On that day the financial services group's shares were trading at $39.80. Today they trade at more than $67 per share, offering Mr O'Neal a potential profit that is $5m greater than if the shares had been offered before the attacks.

Stock options are typically used by companies to reward executives. But the practice has come under scrutiny as it offers recipients the right to buy shares at the same price for years to come.

In the days after the 9/11 attacks, the US stock market closed and share prices fell 14%, the worst week for the Dow Jones Industrial Average since the Nazi invasion of France in 1940. It reopened on September 17 in a solemn ceremony.

That same day, the DIY retailer Home Depot issued a stock option to its recently appointed president Robert Nardelli that allowed him to purchase a million shares over 10 years at that day's price of $36.20. The share price on September 10, the day before the attacks, had been $40.55.

Companies defended the practice, saying the options were a way of calming and offering an incentive to executives in the tumultuous weeks after 9/11. Merrill Lynch denied that the timing of the offer was related to the attacks.

Guardian Unlimited © Guardian Newspapers Limited 2006

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