Tech companies fight attrition with more equity grants as stocks drop

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. “Gravity always comes back, and capital is now looking for more conservative places to go.”

Fintech companies were some of the biggest winners during the pandemic, and are now seeing the deepest pain as investors pivot to safe haven trades. ARK Invest’s Fintech Innovation ETF is down more than 31%, while Affirm has lost more than 63% of its value since January and 79% since its peak in November.

Robinhood shares are down roughly 70% over the past six months and are off 84% from the all-time high in its debut week in August. The brokerage start-up offered to issue employees new stock in December, at roughly $19 per share. The stock was trading near $13 as of Thursday. Robinhood declined to comment on its moves.

Roku, down 47% this year and 75% since its peak in July, gave all employees a new restricted stock-unit grant and pay cash raises of up to 40%.

Snap and Chewy, down 27% and 28% respectively this year, are both offering one-time restricted stock unit grants. Uber, which is down more than 21% this year and 46% from its peak last February, has matched older employees’ compensation to match the offer for new hires.

Amazon is trying something different for employees. The…