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

Beyond Air, Inc. director Robert Carey's stock options were repriced to an exercise price of $1.95 per share, reflecting the company's recent stock performance.

Summary

• Robert Carey, a Director of Beyond Air, Inc. (XAIR), had his stock options repriced.
• The Board of Directors approved an option repricing effective November 4, 2025.
• The exercise price for various blocks of stock options was reduced from previous prices of $10.8 and $5.892 per share to $1.95 per share.
• The new exercise price of $1.95 per share is based on the closing price of the Issuer's common stock on November 3, 2025.
• All other terms of the options, including vesting schedules under the 2013 Equity Incentive Plan, remain unchanged.
• A total of 21,800 underlying common shares are associated with the repriced options.

Sentiment

Score: 3

Explanation: The repricing of stock options to a significantly lower exercise price, while beneficial for the director, generally signals a substantial decline in the company's stock value and potentially poor past performance. This can be viewed negatively by existing shareholders as it dilutes the value of their holdings and resets performance incentives downwards.

Positives

• The reporting person, Robert Carey, benefits from a significantly lower exercise price for his stock options, making them more likely to be 'in the money' or reducing the gap to the current market price.
• The repricing aligns the incentive for the director with the current market valuation of the company's stock.

Negatives

• Option repricing typically occurs when a company's stock price has fallen substantially, indicating poor past performance and potentially a lack of confidence in the stock's recovery to previous highs.
• This action can dilute existing shareholders if the repriced options are exercised at a lower price, potentially increasing the number of outstanding shares at a lower cost to the option holder.
• Repricing can be viewed negatively by shareholders as it effectively 'resets' management's performance targets downwards, potentially rewarding them despite underperformance relative to original targets.

Risks

• NA

Future Outlook

The stock options become exercisable in accordance with their specified vesting schedule and the reporting person's continued service with the Issuer, as per the Company's Amended and Restated 2013 Equity Incentive Plan.

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, 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 is a common practice in industries where stock prices have experienced significant declines, particularly in volatile sectors like biotechnology or emerging technology. It aims to restore the incentive value of employee and director stock options that have gone 'underwater' (i.e., their exercise price is higher than the current market price), thereby retaining talent and aligning their interests with potential future stock appreciation from the current lower base. However, it often signals underlying challenges with the company's performance or market perception.

Comparison to Industry Standards

• Option repricing is a controversial practice, often viewed negatively by corporate governance advocates and some institutional investors. While not uncommon, especially in companies experiencing significant stock price declines, it deviates from best practices that emphasize performance-based compensation tied to original targets.
• Companies like Zynga (2012) and Groupon (2012) have faced shareholder backlash for similar repricing actions after substantial stock value erosion.
• In contrast, many companies, particularly those with strong governance, avoid repricing and instead issue new grants at current market prices or use performance-based restricted stock units (RSUs) that retain value even if the stock price drops.
• The repricing from $10.8 and $5.892 to $1.95 indicates a substantial drop in Beyond Air's stock price, suggesting performance significantly below initial expectations, which is a more severe repricing than typically seen in stable, mature industries.

Corporate Governance

Related Party Transactions

• The repricing of stock options for Director Robert Carey constitutes a related party transaction as it involves a key management personnel and the company.

Stakeholder Impact

• Shareholders: Potential negative impact due to perceived dilution, reduced incentive alignment with original targets, and a signal of past stock underperformance.
• Director (Robert Carey): Positive impact as the options are now more likely to be 'in the money' or closer to it, restoring incentive value.
• Employees (with similar options): May create an expectation for similar repricing if their options are also underwater, potentially boosting morale if granted, or causing discontent if not.
• Company: Aims to retain and motivate key personnel, but risks shareholder dissatisfaction and negative perception regarding corporate governance.

Next Steps

• The stock options will become exercisable according to their vesting schedule, subject to the director's continued service.

Key Dates

Recommendation

The repricing of director stock options to a significantly lower strike price (from $10.8 and $5.892 to $1.95) is a strong indicator of substantial past stock price decline and underperformance. While it re-incentivizes the director, it signals a lack of confidence in the stock's ability to recover to previous highs and can be perceived negatively by the market as a reward for underperformance and potential dilution for existing shareholders. This event suggests underlying business challenges or a significant shift in market valuation that warrants caution, leading to a 'sell' recommendation for investors.

Keywords

Beyond Air, XAIR, Stock Options, Option Repricing, Form 4, Insider Trading, Director Compensation, Equity Incentive Plan, Robert Carey, Beneficial Ownership