Prajna Capital - An Investment Guide

FALLING stock prices have left many employees in a sticky situation, mainly vis-a-vis their employee stock option plan (ESOP). The market price for the options, in several cases, is lower than the conversion price. Since this may have a bearing on employee morale, some firms have been considering the prospect of repricing their employee stock options. Market regulator Sebi allows the repricing of options if the exercise price becomes less than the market price. Recently, companies such as Jain Irrigation, India Infoline, Dish TV and Geojit Securities have repriced their Esops. Jain Irrigation had issued Esops at prices between Rs 447 and Rs 560 in 2005. However, with the current market price of Rs 340, it will reprice its stock options at the ruling market price in addition to a discount of Rs 52.20. India Infoline, for example, has cleared a proposal to reprice the Esops issued in 2007 at Rs 88 to Rs 45.3, early this year. Dish TV, cleared a proposal to reprice Esops at Rs 36.10...