Welcome. Thank you for choosing us
to assist you. My name is ***** ***** my goal is to help make your life, a little... less taxing.
Q: What are the individual tax consequences of lowering an exercise price on a stock option plan?
A: There is no specific language indicating that the old plan should be revised or a new plan created, but based on the following information, that is what is sounds like needs to be done to keep the company out of hot water. In my opinion, it is best to create a new plan. Otherwise, not implementing a new plan to reflect the correct exercise price could be considered fraudulent and deemed as Plan Mismanagement. SEE BELOW:
Under federal law
, the people responsible for overseeing a stock option plan must provide information about plan features and funding, provide a grievance and appeals process, and act in the best interests
of the plan participants. Fraudulent information concerning an employee’s entitlement to options, number of assigned shares, exercise price, or vesting schedules is a violation of the act and a common source of litigation. Choose your plan administrators wisely.
Let me know if I can be of further assistance to you regarding this matter.