While reviewing her study, one question naturally comes to mind: Accounting Considerations The accounting implications are typically the most troublesome aspect of repricing stock options. In the case of private company options, the strike price is often based on the price of shares at the company's most recent funding round. So despite the controversy, repricing underwater options may in fact conserve funds by giving employees a stake in their current company. Skip to main content. The only catch in the exchange is that employees will have to wait an additional 12 months before selling re-priced options.

A reprice is the exchange of employee stock options that are no longer in the money for options that are currently at the money.

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Titled “The Effect of Stock Option Repricing on Employee Turnover,” the paper focuses on firms that did and did not reprice underwater stock options in and on the subsequent employee turnover in Since the value of at-the-money options changes with the stock price, an increase in the stock price today increases the value of future option grants. Likewise, a decrease in stock price reduces the . A company’s stock option plan should also be reviewed to make sure that it does not preclude a repricing of stock options. Other issues that should be considered include the terms of the new option grants, including the number of replacement shares and whether to continue the current vesting schedule or introduce a new vesting schedule for the repriced options.