An employee stock option (ESO) that confers on the holder (the optionee) supplementary options after the original option is exercised. The new options, replacing the original ones, expire on the same date as the original options, and the new strike price is set equal to the underlying stock “market price” at the time the original option is exercised. These incentive-plan options can be traded, upon exercise, for more similar options using, instead of cash, shares already owned by the option holder.
The restoration option is also referred to as a reload option.
