Report: Starbucks bails out some employee stock options

Starbucks Corp. is giving employees with stock options a chance to swap out their “under water” options, due to the company’s significant share price drop in the past year, according to the Pacific Business News.

Stock options are considered “under water” if their exercise price is higher than the current value of the stock.

Starbucks is instituting a “stock option exchange program” that’s set to expire May 29. Under the program, employees can surrender their options that are “under water” for a lesser amount of new options with a lower exercise price.

“It’s a way to reward our partners’ contributions by allowing them to benefit from potential increases in our stock price,” Starbucks officials said in a filing with the Securities and Exchange Commission.

Eligible employee stock options affected by the program have an exercise price per share greater than $19 and were granted prior to Dec. 1, 2007.