Executives of Imperial Bancorp of California, confronted with a 66% decline in the bank's stock price from July through October 1998, saw their stock options become worthless. Rather than risk defections of managers, the company decided to reprice the options, enabling its executives to once again buy the stock at cut-rate prices.

Other banks may face a similar dilemma if their stocks decline sharply. Banks are among the biggest issuers of employee stock options, trailing only securities firms and technology companies, according to Pearl Meyers & Partners Inc., an executive compensation firm in New York.

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