Replies to post #41837 on Avid Bioservices Inc (CDMO)

[cheynew]

FASB calls this a repricing.

The Financial Accounting Standards Board (FASB) issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation (FIN 44), the intent was to clarify the application of previous guidance on equity compensation contained in APB 25 and FAS 123. FIN 44 provides that either the reduction of an option’s exercise price or its cancellation and the granting of a new option at a lower price to the same person at any time within 6 months before or after the cancellation will be deemed a repricing. If an option
granted six months prior to or six months after the cancellation date has an exercise price below the exercise
price of the canceled option, then that option and all others up to the total number of canceled options granted to an individual are subject to variable accounting.

Further, if the company promises a cash bonus payable upon exercise or provides a below-market loan upon option exercise, FIN 44 will treat these actions as an indirect repricing
due to the economic reduction in the exercise price.

Finally, if the company agrees to make the employee whole for
any increase in the stock’s value after cancellation but before the grant of the new option, then regardless
of how long the company waits (e.g., 9 months) to make a
subsequent grant, that new option grant will be subject to variable accounting.

If the company promises a cash bonus payable upon exercise...FIN 44 will treat these actions as an indirect repricing.


http://www.mitforumcambridge.org/spring02/resources/Hauser.pdf

[realist1]

RE "The old options
are cancelled and new ones are issued with the same amount of shares and a new strike price based on the current market value at that time. "

Please reread what you posted.
That's the same net effect as repricing!
rather than "reprice" the old ones, they'll cancel the old ones and have new ones at a lower price???
Six of one, half a dozen of the other.
No, management doesn't deserve to be awarded for long term failure. They don't deserve an award for getting the stock BACK to where it was. And to even consider giving them awards when they are doing so poorly that the stock is most likely going to be reversed split is the height of absurdity.

All my opinion of ocurse.