Investors are getting antsy as rising stock-based compensation expenses against falling stock prices threaten their returns.
The competitive landscape for talent over the past two years led tech companies to dole out equity in place of cash to make compensation packages as enticing as possible. As long as the stock price went up, investors had very little to say because it was part of the company's growth strategy, said Aalap Shah, managing director at executive compensation consultancy Pearl Meyer.
In a period where investors are focused on profitability over growth, such retention and hiring efforts begin to look costly. Shareholders are still paying for the existing stock grants and now they're going to pay for new grants, too, said Shah.
"The drop in the stock price makes the expense, for lack of a better way to phrase it, a lot more expensive," he added.