Underwater Stock Options

Underwater Stock Options Mark Poerio - of The Paul Hastings Law Firm (Washington, DC 202.508.9582) Underwater Stock Options: How to Recover Without – Underwater Stock Options: How to Recover Without – * Violating the Securities Laws. Underwater Stock Options: How to Recover Without – * Violating the Securities Laws. * Creating Accounting Disasters. Underwater Stock Options: How to Recover Without – * Violating the Securities Laws. * Creating Accounting Disasters. * Triggering Tax Problems. Alternative #1 Veneer: Grant more options Alternative #1 Veneer: Grant more options Art: Strings! Biz Goals Alternative #1 Veneer: Grant more options Art: Strings! Sunsets Biz Goals Better Wood? Alternative #2 Cancellation Program: Alternative #2 Cancellation Program: Either New grants in 6 months Alternative #2 Cancellation Program: or Restricted Stock Now Alternative #2 Example: Restricted Stock 100K underwater options. 10% exchange ratio. $4 per share current FMV. 20% vesting for 5 years. Vesting: Best Practice * Longer Years of Service * Performance Accelerates Vesting: Best Practice * Longer Years of Service * Performance Accelerates Golden Parachute! Deferred Share Twist * Vesting ~ Restricted Stock * Better Golden Handcuff Deferred Share Twist * Vesting ~ Restricted Stock * Better Golden Handcuff Director Fees/ Retainers Conclusions Manage Financial Expense Craft Terms of New Awards