Repricing stock options: current trends and dangers
Article Abstract:
Repricing executive stock options should be done to scale down existing awards levels to previous levels. Underwater options should be left untouched or exchanged for new options at reduced prices. As an example, for a stock price of $6.00 with an underwater or exercise price of $10.00, no adequate discount will be generated if the Black-Scholes method is used. In this case, the compensation committee can take an aggressive discount and let executives decide if they want the repriced option award or retain the present underwater option award.
Publication Name: Journal of Compensation and Benefits
Subject: Insurance
ISSN: 0893-780X
Year: 1998
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Facts and fictions about reload stock options
Article Abstract:
The use of reload stock options (RSOs) has been increasing steadily over the years, as firms attempt to adopt alternative strategies for optimizing their compensation portfolio. Unlike conventional stock option schemes, RSO awards a new option grant to an executive at the time he makes use of the stock option award. Contrary to popular beliefs, RSOs do not promote stock overhang and do not incur additional costs to shareholders. Instead they ensure that the rate of stocks awarded to employees are maintained at a very high level.
Publication Name: Journal of Compensation and Benefits
Subject: Insurance
ISSN: 0893-780X
Year: 1999
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Application and valuation of stock options in managerial compensation plans
Article Abstract:
A stock option plan is a form of long-term executive compensation based on measures of corporate performance. It gives management the right to buy a given number of shares at a certain price for a specified period. A stock option plan serves to motivate management to improve the stock's long-term performance than look for short-term profits. They are used so that management's overall compensation is similar to shareholders.
Publication Name: Journal of Compensation and Benefits
Subject: Insurance
ISSN: 0893-780X
Year: 1998
User Contributions:
Comment about this article or add new information about this topic:
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