Trade Desk asks to reset its underwater options. Shareholders get no reset.

Boardroom Alpha · Executive Brief

The Trade Desk (TTD) asks shareholders on Monday to lower the price at which its employees and executives can buy shares with their stock options. That price, the exercise price, is now above the share price on most of the options after a 77% fall in a year, so they are “underwater” and would gain a holder nothing if used today. The reset would cut it to Monday’s close.

The board says the options may now be seen by their holders as having “little or no incentive and retention effect.” In our view that case holds up for rank-and-file staff, whom the company needs to keep after a 15% workforce cut. It is much weaker for the executives, because the board gave them new awards last month and asks little new of them in return: beyond a six-month holding condition, no fresh vesting, no performance test and no fewer options. And the person whose options gain most, Chief Executive Jeff Green, controls about half the votes, so the outcome is largely his to decide.

Why the stock fell

Growth stalled. The company, which names Google and Amazon among its competitors, grew revenue 18% in 2025 but only 3% in the second quarter of 2026. It forecast third-quarter revenue of at least $650 million, against $739 million a year earlier. Its adjusted EBITDA margin, a measure of operating profit, fell to 34% from 39% in the second quarter, according to its second-quarter results.

Three earnings days did most of the damage: the stock fell 33% on Feb. 13, 2025, 39% on Aug. 8, 2025 and 22% on Aug. 7, 2026. That fall is what left the options underwater.

What the board is asking

The repricing, which the board approved on Aug. 13 subject to the vote, covers up to 15.6 million options held by current employees and executive officers under the 2025 Incentive Award Plan, according to the special meeting proxy. They were granted from April 2017 through Sept. 16, 2026, at exercise prices from $3.69 to $122.59. Any option priced above Monday’s close would be reset to that close.

Nothing else changes: the options keep their other terms, including their vesting schedules, the dates on which holders earn the right to use them. One condition applies automatically: the original price comes back if, within six months, a holder exercises (buys the shares) or leaves for any reason other than being let go without cause. The proxy qualifies the conditions with “except as otherwise determined by” the board or its pay committee, which leaves the board discretion over them.

Non-employee directors and former officers are left out. So, “at this time,” are incentive stock options (a tax-favored kind) and Green’s two large performance-based option grants, from 2021 and last month, which vest only as the stock reaches set price levels.

The vote is needed because the plan bars a repricing without shareholder approval. The company’s 2026 annual proxy listed “No Stock Option Re-pricing” among its pay practices and said the plan does not allow it “without the approval of our stockholders.”

What the executives get

The simplest measure of what the executives get is how much less they would pay in total to exercise their options. The new price will be Monday’s close, so any figure today is an illustration. We use $14.49, the Sept. 16 close and the price in the proxy’s option tables. At the Oct. 12 close of $11.94, every cut would be larger.

Green holds 1.62 million eligible options granted from 2021 to 2026, at average exercise prices ranging from $25 to $74.90. Exercising all of them would cost about $70 million; at $14.49 it would cost about $23.5 million. That is a cut of about $46.5 million, or about $50.7 million at the Oct. 12 close.

The four current executive officers hold 3.19 million eligible options, and their combined cut is about $77.7 million at $14.49. After Green come Jay Grant, the chief legal officer, at about $20 million; Vivek Kundra, the operating chief, at $8.8 million; and Nate Olmstead, the finance chief, at $2.3 million. Most of the total goes to staff: non-executive employees get at least $225 million of the roughly $303 million, about three-quarters.

Some of these grants are only months old, so the board would be resetting prices it set this year. Olmstead’s 439,753 options were granted on July 9, the day he joined, at $19.75. Green’s newest eligible grant, 737,028 options at $25, is from March 3.

The $46.5 million is not money in Green’s pocket. Right after the reset, the exercise price equals the share price, so exercising gains nothing; the cut pays only as the stock rises above the new price. The company will book the reset’s added value as extra pay expense under the accounting rules; the proxy does not say how much.

What the reset changes is how far the stock must climb before the options pay. Green’s eligible options carry an average exercise price of $43.25, about three times the Sept. 16 close; even his newest, at $25, need a 73% rise to pay off. After the reset, they gain from the first dollar above Monday’s close.

The company’s case

The board says the options are now “a less effective means of incentivizing and retaining” their holders, and that the repricing is “a straightforward and cost-effective means of resetting the incentive value.” Unlike new grants, it adds no shares to the awards outstanding.

The pay committee, advised by the consultants Compensia and Equity Methods, says it weighed four alternatives. An exchange, which swaps old options for new awards rather than repricing them, would have fallen under tender offer rules and brought “added time, costs, complexities.” New grants would have increased the overhang, the stock already set aside for outstanding awards.

Waiting for a recovery risked undermining the options’ incentive and retention value. A reset without the six-month window would have done less for retention. If shareholders say no, the company “may consider alternative compensation arrangements.”

Recent departures give the retention concern some support: the finance chief has changed three times since August 2025, counting an interim, and the chief strategy officer left the job in May. The repricing also reaches well beyond the executives. The 2,342 employees in the plan are about three in five of the 3,843 people the company employed at the end of 2025, and on Sept. 3 it said it would cut about 15% of its workforce.

Our view: reset staff options, not top executives’

Resetting options for rank-and-file staff can help keep them after a 77% fall. Top executives are different. They run the company and answer for its results, the board gave them substantial new awards last month, and insiders have sold about $475 million of stock since the start of 2024. A reset should not shield them from a decline that shareholders have absorbed.

The question for shareholders is what they get back. An option gives its holder leveraged upside, but only above the price set at grant. Repricing restores that upside from a lower starting point after shareholders have absorbed the decline. A shareholder who bought at $50, $60 or $75 still needs the stock to climb back to that price to break even, as Green does on the shares he bought in March.

Shareholders have also already spent heavily to offset dilution from stock pay. The company spent about $2.5 billion buying back stock from 2023 through June 2026, under a program it says is “designed to help offset the impact of future share dilution from employee stock issuances.” That included about $1.4 billion in 2025 for 26.2 million shares, about $53 each; those shares are now worth about $313 million.

In return, option holders give up very little. The six-month window only delays a gain; it is not new vesting. It adds no performance test, cancels no options and does not restart the schedule on which they are earned. Nor were the options about to expire: about 80% of the executives’ eligible options have more than eight years left to run.

The executives are the weakest part of the case, because the board has already moved to keep them. On Sept. 14 it granted Green an option on 7 million shares at $14.97, which vests in stages as the stock reaches prices from $18 to $105. The 8-K calls it “a bridge from the Company’s current stock price” to his 2021 grant’s targets.

The same day, Grant, Kundra and Olmstead received restricted stock, shares they earn by staying, in their case over four years. Together the awards were worth about $23 million at that day’s price, their Form 4s show.

Apart from Green’s March purchase, insiders have been sellers. Since the start of 2024, current officers and directors have sold about $475 million of stock on the open market, Form 4s show: Green about $443 million, at $80 to $126 a share; Grant about $23 million, at $90 to $120; and Samantha Jacobson, the former strategy chief who remains a director, about $9 million.

Green’s and Grant’s sales were under prearranged trading plans, which set the timing and terms of sales in advance. The only open-market purchase was Green’s: 6 million shares for about $148 million in March, now worth about $72 million. Kundra, Olmstead and four of the six outside directors have neither bought nor sold.

For Green in particular, the retention case is much less compelling: he is the founder, with stock worth about $593 million and effective control of the vote. The proxy acknowledges the conflict, saying approval “may benefit our executive officers,” but does not say why they, or grants as recent as July, are included, or what the reset will cost.

A reset also weakens future grants: if options can be repriced after a fall like this one, holders of the next grant have less reason to believe they bear any downside. Where funds have backed option exchanges, the programs left executives out. For staff, a reset can be justified without much in return. For executives, we would want something real back: new vesting or performance conditions, fewer options so the value is unchanged, or an exercise price set above the market.

Who decides

Green does, in effect. The proxy puts his voting power at 50.2%, almost all of it from 42.1 million Class B shares, a separate class that carries 10 votes per share. That figure, as of July 31, counts about 4 million options he could exercise. On the shares he held on the record date, the cutoff for who may vote, his votes are 49.8% of the total.

The proposal needs a majority of votes cast, so if Green votes for it, it fails only if about 99% of all other votes are against it. The proxy does not say he will abstain, and the vote does not exclude his shares.

The largest outside holders are index funds, and funds have consistently opposed repricings. In fund vote reports from 2023 through mid-2026, most funds that voted were against each of 21 straight repricings of options or similar rights, and BlackRock funds backed none. Of 15 option exchanges, only two won the backing of most funds that voted, at Sage Therapeutics and Karyopharm in 2024, and both left out executive officers. If they vote the same way here, they are still unlikely to change the result.

Our read: With Green’s votes, the repricing will almost certainly pass. Resetting staff options after a 77% fall is defensible, and so, arguably, are new performance awards for the executives. What the board has not explained is why executives who received significant new awards last month should also have their old options reset without new vesting, performance conditions, fewer options or another give-back.

The repricing is unlikely, on its own, to drive anyone’s view of the stock. It is evidence on something else: how this board, under a founder with voting control, weighs accountability when it sets pay.

What to watch

• Oct. 19
  Meeting at 1 p.m. Pacific; that day’s close sets the new price. Results are due in an 8-K within four business days.
• November
  The third-quarter 10-Q, with the full award agreement for Green’s September grant.
• Early 2027
  The 10-K, with the extra pay expense from the repricing, booked in the fourth quarter.
• April 2027
  The six-month window closes; holders can exercise at the new price.
• 2027 proxy
  The repricing’s value in the executive pay tables, and how shareholders vote on pay.

Sources: The Trade Desk’s special meeting proxy and its Oct. 7 supplement, its 2026 annual proxy, 10-K, 10-Q and 8-K filings, and Form 4 filings; Boardroom Alpha data on prices and on fund vote reports filed on Form N-PX. Voting power is as the proxy reports it at July 31, 2026; Green’s 49.8% uses the Sept. 14 record-date share counts and excludes his options. Insider sales are open-market sales on Form 4 since Jan. 1, 2024 by current officers and directors. Returns run to the Oct. 12, 2026 close. Boardroom Alpha is an independent research and analytics company and does not invest. This brief is for information only and is not investment advice or a proxy solicitation.