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What is entailed in private company stock option repricing?

I'm curious if recent private company option repricings have included terms other than just price, i.e. changes to vesting, numbers of shares outstanding, option life, etc.  Also, if you've done recent repricings, did you do it with an offering circular, or just by fiat by the board?



Topic Expert
Edward Abbati
Title: Vice President of Finance
Company: Location Labs
LinkedIn Profile
(Vice President of Finance, Location Labs) |

In my particular case, it was a negotiation with our key shareholder/Board member. Since we had significant down round and 99% of the employees were under-water, we agreed to a lower price but had to settle for 20% less in shares. The management team did everything to get a better deal since the down round had nothing to do with management performance but we were hurt by an unavoidable market downturn. Overall, it was not a great experience and in the end, the down round effective the overall employee morale. We ended up give out more share later that year but the damage was already done.

(Controller) |

After a large extraordinary dividend our (private) company reset option prices lower and increased the number of options. The resetting was done is such a way as to make the value of the options the same as before the dividend and is stipulated in Treasury regulation 1.424-1(a)(5). If done in accordance with Treasury, then there is no tax consequences to option holders. The option resetting was done via board resolution.


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