Reload Stock Option

A replacement stock option granted by some companies to optionees upon a stock swap. The number of reload shares granted is equal to the number of shares delivered to exercise the option plus, in some cases, any shares withheld for tax withholding obligations. The exercise price of the new option is the current market price. The option generally expires on the same date that the original option would have.

Reload Option

Employee stock options that can be traded for more employee stock options. When this option is exercised, the option holder pays the strike price in stock already in his/her possession, rather than in cash. A reload option must be exercised prior to the expiry date because the new stock options retain the former expiry date. When the reload option is exercised a new strike is set; it is equal to the market value of the underlying stocks at the time the first option is exercised. This is useful to an employee if he/she wishes to set a new, lower strike for the option. See also: Early Exercise.

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References in periodicals archive

This month's column discusses two consensuses reached at a recent meeting of the Financial Accounting Standards Board emerging issues task force (EITF or task force) concerning how to account for costs incurred to treat environmental contamination and the accounting for a reload stock option feature in a stock option plan.

This EITF issue, Accounting for a Reload Stock Option, discusses how a stock option plan should account for a special feature contained in certain plans.

Accounting issue: Should a plan with a reload stock option feature be accounted for as a fixed or variable plan?

Accounting for environmental costs and reload stock options

The current issues section explains and discusses three issues related to stock: repricing of underwater stock options, using reload stock options (a special form of stock option), and accounting for stock awards.

Compensation Committee Handbook. (Director Library)

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