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An exchange of previously granted, now underwater stock options for lower-priced options at the current market price. The actual exchange can be structured in various ways and with differing ratios of old-to-new stock options. Repricing annoys shareholders and causes an earnings charge in the company's accounting, but it restores the employee-retention value that is part of the purpose of stock options to begin with. A company wants to structure the repricing to avoid the need for shareholder approval and the cancellation/regrant provisions of the NYSE and NASDAQ listing rules.
An option exchange can also be a form of repricing. For more on this topic, see the section about underwater stock options on this website.
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