4 ms·

Some companies decide to reprice the options and/or grant more options to help with retention. Also companies with high valuation and closer to an exit give out

• pmikesell 11y ago
  And also - the price that employees pay for stock options is the common share price which is appreciably different (2x - 20x) from the preferred price. The preferred share price is what the investors paid, and it is that higher valuation the ms is writing down. There's a much longer drop before employee share are underwater in a pre-public company.
  • JonFish85 11y ago
    Yes and no. Sure on purely the face of it there is a much bigger gap before they're underwater, but that's because the preferred shares carry some nice benefits: preference, multipliers and possibly some control of the company. Marking down the value of the preferred shares implies that those benefits aren't worth what they paid a premium for, which means that common shares are also less likely to be worth anything, since they generally get paid out only if the preferred shares are converted or if there is money left over after preferred shares get paid off.