With Most Large Company CEO Options Underwater, They Should Not Be Repriced

Investing

Published: March 8, 2009 7:28 am

Last Updated: March 26, 2020 1:22 am

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According to The Washington Post, a compensation research firm has calculated that the bear market has put a lot of CEO options underwater. The paper says that “As of late last year, nearly 99 percent of Fortune 500 chief executives held options with strike prices above the current stock price, Equilar said. Such options are “under water.”

Should the options be repriced at lower levels? No.

Most company stock prices owe a great deal of their rise in value to the bull market. This drove up the valuations of CEO options. Now management and boards want to avoid sharing in the devaluation of their shares due to the incredible market sell-off.

Also, who is going to reset the value of the stock that all the shareholders in these companies paid cash for?

Douglas A. McIntyre

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