Tech companies fight low morale and attrition with more equity grants as their stocks get slammed

cnbc.com:

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Tech companies are looking to issue new stock and cash perks as slumping share prices weigh on employees' wallets and morale.

Robinhood, Snap, Roku and Uber are among those offering more equity grants or cash compensation amid drops in their stock prices. Silicon Valley recruiters point to frustration among candidates, who may have been granted options near an all-time high and are deeply underwater after the sell-off. All four companies have share prices that are more than 46% off their peaks.

«Seeing their earnings shrink on a daily basis is distracting,» said Will Hunsinger, a former start-up founder and CEO of executive search firm Riviera Partners. «There's a lot of pressure for these companies to take action — either repricing options to reflect market conditions, or coming up with supplemental cash compensation for folks — especially when you have companies performing well but volatility and the uncertainty in the markets is depressing the stock price.»

It's common for tech employees to forego a higher base salary for a bigger slice of company shares. For decades, the move has allowed for a substantial payday in a successful public offering or acquisition. For start-ups, it can be a less expensive way in the near-term to attract employees.

But that trade-off doesn't work if share prices drop.

High-growth tech names have been crushed by the threat of higher interest rates and the Federal Reserve's policy pivot. The tech-heavy Nasdaq has seen taken the brunt of it and dropped into correction territory, down more than 10% from its record high in November.

«So much capital was flowing into venture and the public markets, the valuations were astronomical,» Stanford GSB professor Robert Siegel said.