ByteDance Ltd., the parent of short-video hit TikTok, is planning to lower the price of its stock options to retain employees after a sharp downturn in technology valuations over the past year.
(Bloomberg) — ByteDance Ltd., the parent of short-video hit TikTok, is planning to lower the price of its stock options to retain employees after a sharp downturn in technology valuations over the past year.
Option prices will be reduced to $155 a share from the earlier $195 a share, or a cut of just over 20%, according to a human resources executive at the company who asked not to be named because the details aren’t yet public.
ByteDance’s valuation in private trading had dropped to below $300 billion from a high of more than $400 billion, Bloomberg News reported in July.
The Beijing-based company is making the adjustment primarily to retain workers and entice new ones after a decline in technology stocks worldwide and a crackdown on internet giants within China.
Options give holders the right to acquire shares at a predetermined strike price, and they make money if the market valuation is above that strike price.
ByteDance is showing good faith by repricing the securities, the company executive said, providing competitive compensation to motivate employees as they take on new challenges.
ByteDance is taking action because it wants to retain talented employees and attract promising hires.
The company, co-founded by Zhang Yiming, has about 110,000 employees. It is considered one of the rising powers in China’s technology industry, alongside Alibaba Group Holding Ltd.
and Tencent Holdings Ltd.
Employees who hold options above the $155 level are eligible for the one-time award of new options.
Xi Jinping’s crackdown on the tech sector has deflated growth prospects for China’s tech giants, which in many cases are experiencing their first revenue declines on record.
That in turn has spurred historic industry layoffs and encouraged top talent to look for opportunities elsewhere, despite unemployment.
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