Buffeted by fourth-quarter losses and broad shifts in company strategy, Netscape's stock price recently hit a new 52-week low. Ironically, this occurred on the same day the options were repriced.
The company announced on January 23 that all of its employees, with the exception of executive officers, would have the option of repricing their stock options. Netscape said the options would reprice as of January 28.
That was the day Netscape shares dropped to 14-7/8, before closing at 16-13/16.
The repricing of options typically is viewed as a way to retain employees, because usually they want to remain with their employer at least long enough to cash in. However, if the exercise price is higher than what the price at which shares can be bought on the open market, the value of the options is reduced.
Netscape's share price has rebounded during the past week thanks to rampant rumors of a buyout of all or parts of the company. Executives from Oracle, one of the rumored suitors, as well as a source familiar with America Online, another rumored suitor, denied that the companies had any interest in such a deal.
Under its current employee stock plan, Netscape employees do not become fully vested until they have been with the company for four years. Employees who joined the company when it first formed will become fully vested this April, but the company does not anticipate that those employees will flee once they are able to cash in. A company spokeswoman said that approximately 100 employees or less will fully vest by the end of this year.
Any employees laid off during the restructuring the company currently is undergoing will not retain their stock options.
The repricing, which was the decision of Netscape's board of directors, will not affect the company's bottom line, a spokeswoman said.
Netscape is not alone in repricing its employee options. Apple recently repriced as well, also due to a lagging stock price.