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Firms Reprice Employees' Worthless Stock Options

Repricing plans toss lifeline to 'underwater' stock option holders

By Rob Quinn, Newser Staff

Posted Mar 7, 2009 11:12 AM CST

(Newser) – Major firms are trying to boost morale by giving workers another chance to profit on stock options made worthless by the stock market dive, the Washington Post reports. Many employees—especially execs—are currently stuck with "underwater" options with a strike price above the trading price. Close to 100 companies are working plans to reprice options.

At Google, the 60% share price drop since its November 2007 peak has left 85% of its employees holding underwater options, and the firm has offered to swap them for ones set at yesterday's closing price. Ordinary investors who have no choice but to take a loss complain that repricing plans are unfair; Starbucks and several others are trying to defuse criticism by making repricing options available only to the rank and file and not executives and directors.

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Starbucks Corp. employees wait to hand out gift bags Wednesday, March 19, 2008 at the end of Starbucks' annual shareholders meeting in Seattle. (AP Photo/Ted S. Warren)

A Google worker rides a company bike in front of Google headquarters in Mountain View, Calif. Google has offered to reset share prices to help workers mauled by the bear market. (AP Photo/Paul Sakuma, file)

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It goes to a sense of entitlement, which I think is misplaced. There are a lot of people other than executives who could use good-performing stock in their portfolio.
- Con Hitchcock, a lawyer who advises activist investors on corporate governance

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Firms Reprice Employees' Worthless Stock Options