Stock options are often a significant, and critical, component of a public company’s compensation and benefits programs as they align the interests of employees and stockholders—when the company’s stock price increases, option holders and stockholders alike benefit. When a company’s stock price falls below the exercise price of outstanding options (that is, when the options become “underwater”), the incentive value of the options is reduced and, if the stock price falls significantly and/ or experiences a sustained decline, the incentive value can be all but eliminated. When options have been underwater for a prolonged period of time, public companies invariably consider a variety of ways to restore that lost value, including by “repricing” the options.