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Contract Renegotiation and the Optimality of Resetting Executive Stock Options

Authors: Acharya, Viral V.
John, Kose
Sundaram, Rangarajan K.
Issue Date: 9-Dec-1998
Series/Report no.: FIN-98-088
Abstract: 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.
Appears in Collections:Finance Working Papers

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