jdunn001; you are right. I was fooled by the formating which made the formula rather difficult to read. However in effect the company can enable insiders to get the shares for free (that's why it is called a "cashless" exercise) even if the market price is lower than the exercise price if they simply reprice the options lower, something that is done regularily. Rather too regularily IMO.

Regardless, the whole idea that insiders can get shares for free without a specific clause to that effect in their contract seems to defeat the purpose of issuing options which I see as a way to incentivize the insiders into increasing the company value and the share price and in that way everyone benefits. Providing for "cashless" exercise is a simple give away.