The value of the underlying shares has decreased (materially), resulting in the stock options being “under water”, meaning it is currently not interesting to exercise the stock options. What can we do?

A first possibility is to extend the exercise period of the stock options. Depending on the significance of the decrease of stock value, however, such an extension, potentially, needs to be for a longer period in order for the underlying stock to be able to move in-the-money.

Another solution could be reducing the exercise price. However, be aware that both of these possibilities may have an impact from a tax perspective if the stock options were taxed at grant.