Ravi Ravulaparthi

Where the valuations of companies have come down, some previously issued options may be “underwater” or unattractive. This tends to reduce employee confidence in equity compensation in what is already an uncertain period. Companies need to carefully consider aspects such as including size and timing of the corrective action, impact of setting a precedent, impact on other stakeholders i.e. dilution.

ESOPs can help you ride a wave, but what happens when you’re underwater?