n. Stock options in which the strike price — the price at which the employee is contracted to buy the shares — is higher than the current stock price.
Confronted with the shortcomings of their options strategies, tech companies might be expected to look around for alternatives. But they're not. The few companies that are talking publicly about dealing with their employees' underwater options are desperately looking for ways to dial back the clock to the way things were before the Nasdaq bear arrived.
Earlier this year, CDNOW and Barnesandnoble.com, both e-tailers whose share prices have been stomped, reportedly announced plans to re-price underwater options.
The revival extends throughout the corporate ranks. In a sampling of over 100 New York Stock Exchange companies, FORBES found that in 60% of the cases the stock is now selling comfortably above the average exercise prices of options held by all officers and directors a year ago. Another 14% are near or slightly above. At General Electric, for example, Chairman Reginald Jones is still a bit behind, while his three vice chairmen are a bit ahead; at American Airlines, Chairman Albert Casey is now in the black though his fellow officers are not. Only 26% of the sampled companies still have underwater options.