... the amount of wealth they had on the line. In the principal-agent relationship that defines most public companies and their executives, this new breed of corporate leaderscrossed the line. They ... options, if the stock goes up for whatever reason,then the options pay off. If the stock does not go up, then the optiondoes not pay off. Period. That’s the extent of the downside for the executive, ... calcu-late the Black-Scholes value of the underwater options and the 124 PART TWO Elements of the Solution07_200295_CH07_Delves 8/19/03 2:36 PM Page 124value of the new “replacement” options and then...