If you give an option where the strike price is "the current fair value", the employee doesn't have to pay taxes. But "the fair value" is defined by the 409A. T

If you give an option where the strike price is "the current fair value", the employee doesn't have to pay taxes. But "the fair value" is defined by the 409A. The company usually doesn't care about the strike price and would rather just give the employee as much value as possible. A low 409A is much better for the employee, a teeny bit worse for the company, and so companies just go for a low one.