[dadkins]

I'm afraid I don't follow your math. The cash to exercise the options goes immediately back into the company's bank account. It's as if they were handing out shares instead of options. The only expense should be the tax on the fair market value of the shares, which should be considerably less than 100% of their value, no?

[jamiequint]

You're right, I somehow forgot who the money was going back to. I wonder if you could enforce this legally without the employee just having the ability to walk away with the current value of the options in cash. I also wonder what the tax implications of the purchase are to the company. I agree that this solution makes a lot of sense though.