Tech Stock Slump Hits 2021 Stock Comp

Tech company managers have some interesting compensation discussions coming up with their direct reports, thanks to the bear market affecting much of tech. If those subordinates receive annual awards of stock or options, they’ll very likely hear both good and bad news. The good news is that grants made this year will have lots of upside as the stock is likely being issued at prices much lower than last year’s. The bad news? The value of last year’s grants.

Take DocuSign, whose stock price hit a high of just above $300 last August. Between February and October, it issued 2.9 million restricted stock units to employees at $234 each, according to its securities filings. DocuSign shares are now trading around $122, cutting the value of the grants nearly in half. Or Peloton, whose business has been slammed by a slowdown in growth after a pandemic boom. In the year to June 30, 2021, it issued 4.8 million stock options with an average exercise price of $102.36. Given that Peloton stock is now trading below $30, those options are worthless—probably for good.