Which One of the Following Is an Argument Against Repricing

question 61

Multiple Choice

Which one of the following is an argument against repricing employee stock options?

• A) ESO's are originally issued with positive intrinsic value so there's no reason to reprice.
• B) Employees have more incentive when options are "under-water".
• C) Repricing is a reward for failure.
• D) It is unnecessary to reprice as ESOs expire quickly.
• E) Repricing affects the market price of the firm's stock for all shareholders.

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Definitions:

Traceable Fixed Expense

Fixed costs that can be directly linked to a specific segment of the business, and would disappear if the segment did.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remains constant regardless of the level of production.

Variable Costing

An accounting method that considers only variable production costs (costs that change with the level of output) in the calculation of product costs.

Unit Product Cost

The total cost associated with producing one unit of a product, including both variable and fixed costs.