Form 4: Beyond Air CFO's Options Repriced to $1.95

Beyond Air, Inc. Chief Financial Officer Douglas Quinton Larson's stock options were repriced to an exercise price of $1.95 per share, effective November 4, 2025.

Summary

• Douglas Quinton Larson, Chief Financial Officer of Beyond Air, Inc. (XAIR), had his stock options repriced.
• The exercise price for 47,500 stock options was reduced to $1.95 per share.
• This repricing was approved by the Issuer's Board of Directors and became effective on November 4, 2025.
• The new exercise price of $1.95 per share matches the closing price of Beyond Air's common stock on November 3, 2025.
• The options were originally granted with exercise prices of $10.80 and $5.892.
• All other terms of the options, including vesting schedules under the Company's Amended and Restated 2013 Equity Incentive Plan, remain unchanged.

Sentiment

Score: 3

Explanation: The repricing of options, while beneficial for the executive, strongly implies significant past stock underperformance, which is a negative signal for investors. It suggests a need to re-incentivize management due to a substantial drop in share value.

Positives

• The repricing of stock options to a lower exercise price of $1.95 per share makes them significantly more 'in-the-money' or closer to being in-the-money, potentially increasing their value and incentive for the CFO.
• Aligns the CFO's incentives with current stock performance, as the new exercise price reflects the recent closing price.

Negatives

• Option repricing often indicates a significant decline in the company's stock price, as the original options were likely far out-of-the-money.
• Repricing can be viewed negatively by shareholders as it effectively re-issues options at a lower strike price, potentially diluting existing shareholder value without requiring additional performance.
• The substantial difference between the original exercise prices ($10.80 and $5.892) and the new price ($1.95) highlights a significant past loss in the company's stock value.

Risks

• The necessity of option repricing suggests a substantial decline in the company's stock price, which could indicate underlying business challenges or market dissatisfaction.
• Shareholder dissatisfaction with executive compensation practices, particularly repricing, could lead to governance issues or negative investor sentiment.
• The repricing might not fully restore the incentive value if the stock continues to underperform, leading to ongoing challenges in executive motivation and retention.

Future Outlook

The filing does not provide specific forward-looking statements or guidance beyond the effective date of the option repricing and the continued vesting schedule of the options.

Management Comments

• On November 4, 2025, the Issuer's Board of Directors approved an option repricing, effective as of November 4, 2025, reducing the exercise price to $1.95 per share, the closing price of the Issuer's common stock on November 3, 2025.
• All of the other terms of the options remain unchanged.
• This stock option award was issued pursuant to the Company's Amended and Restated 2013 Equity Incentive Plan, as amended, (the "2013 Plan") and becomes exercisable in accordance with the vesting schedule specified in the award agreement and as previously reported on applicable Form-4, subject to the Reporting Person's continued service with the Issuer as of the applicable vesting date.

Industry Context

Option repricing typically occurs in industries where stock prices have significantly underperformed, leading to executive options being 'underwater' and losing their incentive value. This action by Beyond Air suggests a need to re-motivate its CFO amidst a challenging period for its stock, which is a common practice in biotech or medical device companies experiencing development setbacks or market pressures.

Comparison to Industry Standards

• Option repricing is a controversial practice, often criticized by corporate governance advocates, but it is not uncommon in industries like biotechnology or emerging tech where stock volatility is high and companies rely heavily on equity incentives.
• Companies like AcelRx Pharmaceuticals (ACRX) and Sorrento Therapeutics (SRNE) have historically engaged in option repricing following significant stock declines to retain and incentivize key personnel.
• While it can restore incentive value for executives, it often contrasts with best practices for executive compensation that prioritize long-term shareholder alignment and avoid repricing without shareholder approval or a significant performance hurdle.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential negative impact due to perceived dilution and the signal of past poor stock performance. May raise concerns about executive compensation practices.
• Employees: Could be seen as a positive for the CFO, potentially boosting morale for other executives with similar underwater options, but might also highlight broader company performance issues.
• Management: Directly benefits the CFO by making his stock options valuable again, enhancing retention and motivation.

Next Steps

• Continued vesting of the repriced stock options according to the original schedule.
• Douglas Quinton Larson's continued service with Beyond Air, Inc.

Key Dates

Recommendation

While the option repricing itself is a negative signal reflecting past stock underperformance, it also serves to re-incentivize a key executive. A 'hold' recommendation is appropriate as the repricing doesn't inherently change the company's operational fundamentals, but it highlights a need for the company to demonstrate future value creation to justify the repricing and improve investor confidence. Investors should monitor future financial results and strategic developments closely.

Keywords

Beyond Air, XAIR, Stock Options, Option Repricing, CFO, Executive Compensation, SEC Form 4, Insider Transaction, Equity Incentive Plan