Corporate Board Member: Are These Great Times to Reprice

Corporate Board Member: Are These Great Times to Reprice

February 20 2009

After watching the stock market tumble about 46% from its October 2007 high to January 27 of this year, executives have been left with millions of stock options that are deep underwater.  Some compensation consultants anticipate a surge of repricing, with companies swapping worthless options for new ones whose prices are close to the stock’s postcrash value.

Some 40 companies did just that in 2008 and Steven Hall, a compensation consultant at Steven Hall & Partners in New York City, thinks this is only the beginning.  “I believe the tidal wave will begin building in 2009, once people believe the markets have stablilized a bit,” he says.  “There is nothing worse than deciding to do a recpricing, only to find that the new grant is underwater.  You only get one bite of the apple.”