Contract Renegotiation and the Optimality of Resetting Executive Stock Options
48 Pages Posted: 11 Nov 2008
Date Written: December 1998
Recent empirical work has documented the tendency of corporations to reset strike prices on previously-awarded executive stock option grants when declining stock prices have pushed these options out-of-the-money. This practice has been criticized as counter-productive since it weakens incentives present in the original award.
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