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The Re-Emergence Of Stock Option Repricing

Law360 (February 10, 2009, 12:00 AM EST) -- As the equities markets continue to deteriorate, companies are taking proactive measures to put some value back into management and employee stock options made worthless by the recent declines in their share prices.

These “underwater options” are afflicted with an exercise price that is, in many cases, vastly in excess of the underlying stock’s current fair market value. One potentially effective solution to this problem is to reprice the options by lowering the exercise price.

However, the rules governing option repricing have changed since the last...
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