Revaluation of stock options - that are reset when the exercise price falls below the current trading price of the shares of the company - is a controversial tactic. Critics say that the revaluation is equivalent rewarding failure management firms to provide the level of stock prices, which is more than the strike price of options. The arguments of supporters, however, reflect a common theme - the mood, usually expressed in revaluation firms proxy materials: revaluation helps preserve of CEOs and senior management teams and, derivatively, the financial indicators of the company. Analysis of these diametrically opposed views provides no support for the view that changes in interest rates or promotes retention or firm financial performance. In fact, the overestimation is associated with elevated levels of CEO and TMT turnover. In addition, there is no evidence that changes in interest rates related to the financial performance of the company. "Hide
by Catherine M. Daily, Travis C. Certo, Dan R. Dalton Source: California Management Review 17 pages. Publication Date: July 1, 2002. Prod. #: CMR232-PDF-ENG
Related Case Solutions & Analyses:
Kellogg-Worthington Merger
Ducati & Texas Pacific Group: Wild Ride Leveraged Buyout
Terrys Group: Designing Novelty Chocolates Epilogue
If Only We Knew What We Know: Identification and Transfer of Internal Best Practices
Perna Arts: Managing the Complexity of Creativity and Commerce
Want to Innovate? Then Act Like a Start-up
Joseph Vigneault and the Capital Pool Company Program
OpenPlug (B): Their Way Out of the Dark
SACD
Myriad (A): Breast Cancer Testing in Britain
