> One area where she thought we were less than competitive was our stock option granting process. She reported that her previous company’s practice of setting the stock option price at the low during the month it was granted yielded a far more favorable result for employees than ours.
Whether it's legal or not - not my area, but this is obviously disadvantageous to the shareholders. The strike price is what you get (as a shareholder) for the newly created shares at exercise, if you lower that you have just paid your employees more.
Also, in addition to giving more to the employees rather than the shareholders this results in more short delta rather than short gamma exposure on the company/shareholder part, i.e. it makes it more like a stock grant rather than an option grant.
If you want to give your employees more compensation then just straight up give them more stock/options/money and account that as an expense. There's no free lunch.
Whether it's legal or not - not my area, but this is obviously disadvantageous to the shareholders. The strike price is what you get (as a shareholder) for the newly created shares at exercise, if you lower that you have just paid your employees more.
Also, in addition to giving more to the employees rather than the shareholders this results in more short delta rather than short gamma exposure on the company/shareholder part, i.e. it makes it more like a stock grant rather than an option grant.
If you want to give your employees more compensation then just straight up give them more stock/options/money and account that as an expense. There's no free lunch.