Which one of the following is an argument against repricing employee stock options?
A) ESO's are originally issued with positive intrinsic value so there's no reason to reprice.
B) Employees have more incentive when options are "under-water".
C) Repricing is a reward for failure.
D) It is unnecessary to reprice as ESOs expire quickly.
E) Repricing affects the market price of the firm's stock for all shareholders.

Question

Quizplus · Accepted Answer

Repricing employee stock options is often seen as a reward for failure because it allows employees to benefit from stock options even when the company's stock price has fallen below the original exercise price, which can undermine the incentive structure of stock options.

Which One of the Following Is an Argument Against Repricing