With stock prices falling sharply in recent months, here’s how businesses may be impacted. Higher dilution It is common practice for tech companies to offer employees stock-based compensation (SBC). This can come in the form of stock options or restricted stock units that vest over time. SBC is useful for companies in a few ways. First, it incentivises employees to stay for the long-term to reap the rewards of stocks that vest over time. Second, it allows employees to participate in the growth of the company’s stock price. Third, it aligns employees’ interests with shareholders as the employees become shareholders themselves. Fourth, it helps companies to save cash as it is a non-cash expense. The down-side though is that SBC results in a higher number of outstanding shares in a company, which dilutes existing shareholders. The amount of dilution is usually dependent on the stock price at the time. Take for...