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Research Center : Article

Apr 01,2009 | KPMG

Implications of Modifying Underwater Share Options

Many companies, knowing that out-of-the-money, or underwater, share options can affect the morale and retention of key employees, are considering whether and how to modify outstanding awards. Companies exploring strategies should understand their accounting implications as well as the business, organizational, and regulatory concerns that are the context for the strategies. This edition of Defining Issues describes the accounting implications of the more common approaches and some basic factors that should be considered when a company tailors a strategy to its specific circumstances.

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