Repricing of Stock Options

As the stock markets have begun to pull back from their historically high levels, the boards of directors of corporations that have used stock options to attract and retain employees have found themselves under increasing pressure to modify or replace previously issued stock options that have gone “underwater.” (i.e. options whose exercise price is above the current market price of the corporation’s stock). To address this problem, corporate boards are confronted with the prospect of “repricing” these existing options in order to allow them to retain their incentive value.

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