TOKYO - If your company has the soaring stock price of a dot-com, issuing stock options is easy. Multiply the current stock price by 20, for example, and that's the price at which the options can be converted in three years.
It's not as easy if the stock is sliding, as it is at Nissan Motor Co.
Nissan plans to issue warrant bonds that will be used much like stock options to encourage about 500 of its top managers to pay attention to the company's stock price as a measure of the company's revival.
The problem is, Nissan's stock price has dropped from as high as ¥700 last August, before COO Carlos Ghosn unveiled his 'Revival Plan' for the troubled Nissan in mid-October, to less than ¥450.
And since the bonds will not be issued until March 27, it's impossible to know what will be the baseline price from which Nissan managers will be trying to raise the company.
So the initial exercise price will be the average closing price between March 17 and 24, times 1.025. And just in case, there's a floor: The exercise price won't be set below ¥366.
In other words, if things really get awful, Nissan managers will be rewarded for decisions that bring the stock price to a level lower than it is now.