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Lesson 15. More Strategies and Tips > Asking for Help - Pg. 75

More Strategies and Tips Tip 75 Be sure you understand all the provisions of your grant agreement and any other noncom- pete document to avoid a nasty surprise when you leave. Employees with sensitive information or technology can expect employers to aggressively discour- age them from leaving for a competitor. Several court cases have shown employers willing to file lawsuits against former employees to recover options and profits. On the flip side is a trend for new employers to make employees whole--that is, bringing their financial condition back to where it was before they left the previous employer--by replacing the value of lost options or profits. How much you will get, if anything, depends on how much your new employer wants you. Repricing Options Repricing your options is not something you control, but it could be a real bonus. Basically, repricing is like getting a second free look on your options when you thought they were worthless due to a major decline in the underlying stock's price. Consider this scenario. A company wants to reward its employees and provide an incentive for them to stay. It grants nonqualified options with an exercise price of $35 per share. Soon after the grant, the stock drops to $20 per share. All of a sudden the incentive the company thought it was granting has become a big morale problem. Employees are angry and discouraged. The company can issue another stock options grant at or near the $20 per share price or it can "reprice" the original grant to at or near $20 per share. This is a great deal for the employees because the worthless options are now worth something, at least in their mind. Investors in the company may see things differently. Their stock is now worth