Tech companies combat low morale and attrition by increasing equity grants as their stocks decline.

• All-time high options granted to candidates in Silicon Valley are causing frustration among them as stock prices plummet, resulting in deep underwater positions.
• Tech companies such as Robinhood, Snap, Roku, and Uber are providing more equity grants or cash compensation as their share prices decline.
• "Daily earnings shrinkage is distracting for companies, says Will Hunsinger, CEO of Riviera Partners, who feels pressure to take action,".

As slumping share prices affect employees' wallets and morale, tech companies are considering issuing new stock and cash incentives.

Equity grants and cash compensation are being offered by companies such as , , and in response to drops in their stock prices. Silicon Valley recruiters cite frustration among candidates who were granted options near an all-time high and are now deeply underwater after the sell-off. All four companies have share prices that are more than 46% off their peaks.

Will Hunsinger, a former start-up founder and CEO of executive search firm Riviera Partners, stated that the daily decrease in earnings of these companies is distracting. He added that there is immense pressure on these companies to act, either by repricing options to reflect market conditions or by providing supplemental cash compensation to employees, especially when these companies are performing well but the volatility and uncertainty in the markets are affecting the stock price.

Many tech employees choose to forgo a higher base salary in favor of a larger share of company stock, with the hope of earning a substantial payday through a successful public offering or acquisition. This strategy can be particularly attractive to start-ups looking to attract employees in the near-term.

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

The tech-heavy market has been hit hard by the threat of higher interest rates and the Federal Reserve's policy shift, with high-growth tech names dropping more than 10% from their record high in November.

According to Stanford GSB professor Robert Siegel, the influx of capital into venture and public markets resulted in astronomical valuations. However, he predicts that gravity will eventually return, causing capital to seek out more conservative investment opportunities.

During the pandemic, fintech companies experienced significant growth, but now, as investors shift towards safe haven trades, they are facing significant losses. ARK Invest's Fintech Innovation ETF has fallen more than 31%, while 79% has lost its value since its peak in November.

Over the past six months, Robinhood shares have fallen approximately 70%, and they are currently trading at around $13, which is 84% below their all-time high in their debut week in August. In December, the brokerage start-up offered to issue employees new stock at roughly $19 per share. However, Robinhood declined to comment on its recent stock moves.

Roku, which has experienced a 47% decline this year and a 75% drop since its peak in July, granted employees new restricted stock-unit awards and provided cash raises of up to 40%, according to Blind's data.

Both Snap and Uber are providing one-time restricted stock unit grants, with Snap down 27% and 28% respectively, and Uber down more than 21% this year and 46% from its peak last February.

Amazon is introducing a new compensation plan for its employees that offers more flexibility in managing equity in the company and makes the share price more accessible for investors.

Private tech start-ups raised a record $621 billion in venture capital funding last year, double from a year earlier, according to CB Insights. The cool-down in publicly traded tech names is likely to knock down valuations of private start-ups, although it may take longer.

Jason Stomel, CEO of talent agency Cadre, stated that late-stage unicorns are likely to face challenges, although it has not yet been reflected in financial documents. Engineers, particularly those who joined at an inflated market value, are also considering this possibility.