RE:RE:RE:Options
maritimedreamer wrote: HI Method, i'm wondering if you are willing to dive a little more into your comment here. You mentioned this could be genrally viewed as bullish when management decides to reprice? How would one read these tea leaves? Is it the idea that the company has potentially removed itself from the tough situation and are now willing to re-evaluate to reward those that were involved with the re-structuring? Thanks in advance.... always appreciate the insight.
It's effectively game theory. The BOD can reprice their options whenever they want. They have been underwater for some time now but they potentially waited until the debt was restructured (which they also controlled the timing of to a certain extent). Perhaps they can also see a path to profitability so they think the bottom is in.
It's all just guess work but people usually act according to their incentives.
This podcast discussed some of these concepts:
https://acquirersmultiple.com/2020/07/the-dark-arts-of-corporate-governance/
Of course, it also doesn't cost them anything to reprice their options so the value of the signal it seems is less than if insiders started buying stock. If the bears are right, it really doesn't matter.