I've seen a lot of questions and discussions about agreeing to take some portion of your salary as stock options when starting a job, but the situation I'm in now is that the company wants to reduce everyone's pay and give them the equivalent value in stock options instead, in order to save money.
The company isn't profitable so right now it's totally reliant on getting new investment in order to keep going. For obvious reasons, it's difficult to get venture capital right now, so last week the CEO announced that in order to extend their cash runway to the middle of next April, they wanted to cut everyone's salary and give them stock options instead.
It's a private company so there isn't a stock price, so they're calculating the value of stock options based on the last price that investors bought stock at, which was 2 years ago. One of my problems is I have no idea how to tell if this is an appropriate evaluation.
The change was originally described as voluntary and we've been asked to sign something to agree to this measure but there's been mixed messaging as to what will happen if we don't. One email we were sent said that if we don't agree we'll be fired. We were also told though that the company could make the change without our agreement after a consultation period. I can't find much information about what that entails on the web.
It's a good company and I'm sure the people in charge aren't trying to screw us over but some aspects of this plan don't sound right to me. There's a lot of things I don't really know about the situation and I'd be grateful for any answers to any of my questions:
Is it reasonable for the company to try this kind of thing? I understand why they need to save money but my gut says this is dodgy
Is it legal for them to effectively demand that employees invest in the company under threat of termination? Since it's a private company there's no stock price so I don't know if it could be considered stock price manipulation but it still doesn't seem right.
Can they enforce this change of contract after a consultation period? If so, what exactly does consultation entail?
How should I evaluate the deal being offered? I have no idea how much the stock is worth. It's a good company with some good technology, but I don't understand much of the science behind the technology so I only have what people inside the company say about it to go on.