When a company sees its stock value drop, this can result in employees holding options that are “underwater“ or “out of the money“. This can significantly undermine the intended incentive effect desired by the employer in issuing the option. For these reasons, employers might consider whether to reduce the exercise price on outstanding awards to equal the current market value of the stock, a.k.a. option repricing.
While there are various business impacts of repricing that will need to be considered
Continue Reading Did you know that you can reprice underwater employee options without triggering tax to the employee?