Suppose you could pay an employee $200,000 or $150,000 + stock options. If the two options were rationally considered equal that would mean the missing $50,000

Suppose you could pay an employee $200,000 or $150,000 + stock options. If the two options were rationally considered equal that would mean the missing $50,000 NPV of the employee’s salary would be paid by future investors once they bought the shares. Either in an IPO or in this case by the acquiring company. Options are also a method to retain and incentivize talent, but they’re certainly a form of funding.