It's sad but true that stock-related elements of bonuses paid out when times were good are now worth a lot less than intended. And in the case of underwater options, they're worth nothing at all.
Lehman Brothers, who's stock is down nearly 75% on the highs it reached in February this year, has decided to do something about it. According to The Times, it's working on plans to compensate its senior executives for their valueless options - probably by re-pricing them.
Last time we looked, Lehman's options were by no means the most underwater of the lot. However, given its current predicament it would take a near miracle for the bank's stock to reach the $35 weighted average strike price on all outstanding options at December 2007.
If you're holding options which are so far under water that they've grown large moon-shaped eyes to deal with a lack of sunlight, re-pricing will seem like a good bet. But if you're a shareholder who's already suffered thanks to the ineptitude of executives whose activities are supposed to be aligned to your interests, it doesn't look so hot.
Should banks re-price? Or shouldn't they? We want to know.