n 1999, the practice of repricing stock options died. Last year, it was reborn.

More than two years ago, the Financial Accounting Standards Board ruled that companies that reprice stock options — canceling old ones and replacing them with cheaper ones, following a stock drop — must take an earnings charge as a result. The decision all but ended a strategy that more than 300 companies had used in 1998, according to the Investor Responsibility Research Center.

But as the stock market plummeted last year, executives and compensation consultants found a loophole. It was all a matter of timing.

According to the accounting board's ruling, any time a company cancels options and reissues new ones within six months, that maneuver will be considered a repricing and will necessitate earnings charges each year for the life of the options. But if a company cancels options, waits at least six months, and reissues them, there is no charge.

Sprint was one of the most aggressive users of the loophole. In October, the company said it would allow employees and executives — but not board members — to turn in any options they had received during the year. The company would then replace each canceled option with a new one on May 11, six months and one day after the deadline for turning them in. The exercise price of the new options would be the same as Sprint's stock price on May 11.

"That avoids the spirit of the law, but I guess it's totally legal," said Warren Batts, a Sprint director.

For employees, it was a hard offer to refuse. The average price of the 18 million options granted during 2000 was about $59. On Friday, Sprint's stock closed at $21.99. Employees could also turn in 14 million shares of the tracking stock for its wireless division.

Sprint said that because so many of the original options were under water — with a grant price well above the current stock price — they were no longer a useful device for motivating and retaining employees.

The loophole does have a downside for investors. Employees can benefit if the stock holds steady, or better yet declines, for six months, because their new options will have a lower strike price. "Any shareholder looking at the situation should sell the stock," said Frederic W. Cook, who runs his own pay consulting firm in New York, speaking generally about the practice.

Robin Carlson, a Sprint spokeswoman, called that idea "preposterous," because the repriced options represent only a small portion of employee stock holdings.

These de facto repricings were most popular at technology companies. Ariba, Lante, RealNetworks and Pumatech all offered swaps similar to Sprint's, according to Institutional Shareholder Services in Rockville, Md.

A few companies decided they could not even wait six months. In February, Amazon.com repriced thousands of options, cutting their price from $23 and above to $13.38. To avoid hampering the company with accounting charges for the next decade — the usual life of options — Amazon gave the options a life span of two and a half years. Until then, its profits will suffer because of the exchange, as will earnings at other technology concerns that repriced. Of course, at companies that are not turning a profit, like Amazon, the penalty may seem less painful.