Notwithstanding the absolutely stupid and fundamentally inexplicable performance of the stock market these days, the employee and management options of probably 95 percent of the venture-backed startups are way underwater. That is to say, their option-exercise prices are substantially higher than the current value of the company stock they'd be buying if they exercised their vested options. 

And, for better or worse, they tend to blame the boss for this situation, because that's the person who talked them into the whole thing. The math is awful, the incentive component of the grants has been largely dissipated, and the future of the business at the moment is pretty bleak. This kind of stuff is never happy news for anyone, but it's absolutely horrible news when it's accompanied by realistic estimates and expectations (unlike those emerging from the White House) that the likely period for any material recovery of the economy is several tough years down the road. 

Add to this depressing prospect the fact that, in most cases, the funds needed to exercise options are borrowed either from the company itself or third parties, and that there may be immediate tax consequences, and you see the risk/reward calculations go off the deep end and into some very dark places--regardless of anyone's remaining enthusiasm for the company's ultimate prospects. It's easy to blithely say that "life's not fair" until it's your life that's hanging in the balance and your family that you're worried about feeding. And it's also human nature to look for someone to blame even when no one could have foreseen the scale and duration of this debacle. 

It's at times like these that the CEO really earns his or her keep and the decisions that are made in these toughest of times really dictate the long-term future of the business. It's not only the CEO's job -- it has to be a team effort to succeed -- but it's the CEO who sets the example, renews and restates the company's vision, and defines and directs the hard choices and changes that need to be made. Good people need to be let go, exciting initiatives are abandoned, big dreams are shelved, and survival is all that anyone's talking about. 

While sturdy teams can certainly be nurtured in good times, the way you really become a team that's gonna last is when you share the most challenging tests and learn just how much you depend on each other. The danger now is that it's so easy to get down, and down on each other, which risks fracturing the whole "family." 

Holding everyone together starts at the top. But let's be real, too. Not everyone -- even in the best of times -- is as crazy and dedicated as the founder. That doesn't mean they don't care about you or that they're bad people. They're not against you--they're just looking out for themselves and their families first. Being the boss is both a great privilege and a sacred responsibility and never more so than in the most difficult periods. Every change, every step, and every achievement involve painful and personal sacrifices as well. 

You also learn just how lonely the process can be and how distant so many others can seem. You find out quickly how "outsiders" are surprisingly indifferent to the fates and futures of the many employees whose jobs and livelihoods are on the line in part because it's you (and not them) who has been working daily with these folks, seeing the sacrifices they've been making, and developing deep and personal connections to them as individuals rather than headcount.

Board members are free and happy to give you a wealth of opinions, ideas and suggestions. But they're a lot more reluctant to part with additional cash and it's generally not their money anyway. Remember that VCs mainly get paid to say no. The positions and choices of your early investors and board members may be stressful and enervating, but yours are existential. Lenders, lessors, and landlords are even less inclined to help or be there when the going gets really tough. In the end, it always comes down to you. And, just when you think it can't get any worse, all these folks come to you and ask you to help make things better by taking one for the team. 

And that's exactly what you're going to need to do in most cases.

Hanging onto and reassuring your team can take a fair number of forms (cash payments aren't one) and, with a particular focus on options, which are really the central currency in startups anyway, you're gonna need to get your board and your backers to agree to reset, reload, and replenish the option packages of the key management players. The only real way to get that ball rolling is to make clear to them that whatever you're proposing doesn't include any adjustment or benefit for you personally.

I'm not sure it's realistic to talk about redoing companywide plans at this juncture, but those aren't likely to be as important right now and, frankly, because so many people are being fired, reallocating those recouped options to the broader workforce some time down the line isn't going to be that hard a deal to sell. Right now, you need to keep your top players motivated, focused, and re-incented to the largest extent possible given all the other constraints. Here are a few key considerations to keep in mind. 

1. Don't diddle around and don't do a halfway job.

And do it one time only -- no salami slicing and little bits at a time. For the most part, the direct gesture and the acknowledgement are far more important than the exact numbers, which, almost always, can't really be big enough to be life changing. They're more about morale and attitude-changing than dollars and cents. People feel good or bad about an offer or a deal -- not because of the money -- but because of how you arrived at the deal. Quick, clean, no painful back and forth, and try to treat the group (apart from you) as equitably as possible, taking into account their individual ownership positions, but not their financial or other circumstances outside of the business.

2. Demonstrate that you are putting the business first.

It's okay to explain that you aren't participating, not so much to brag about the sacrifices you are making, but because real leaders demonstrate to their people and everyone else that they are putting them, and the business, first. Whether it's more options, making payroll out of your own pocket, or keeping the whole team together even when the smart move might be otherwise, the main thing is to make it clear to the team, your board, and your investors that taking care of the key players is the most important priority and the best bet for the business as well. 

3. Last, but not least, don't make it into a transaction.

In times like these, great leaders give unreservedly and without any expectation of reward, return or anything in exchange. Anything less than that is just trading -- not giving -- and it radically changes the nature of the gesture and the conversation. This isn't about quid pro quo or bribes or stay bonuses; it's about demonstrating as best you can under the circumstances the importance of these individuals to the business, your continued support and commitment to them, and the fact that their loyalty isn't something that anyone can buy or negotiate for. Loyalty is something that's earned every day, not by words but by actions. In the toughest of times, we need loyalty beyond reason. This is not necessarily the smartest choice for everyone, just the right one. An ounce of loyalty is worth a pound of cleverness.

Bottom line: This too shall pass. Keep your head up, do what needs to be done, and do whatever it takes to keep the doors open. As the noted philosopher Bob Marley used to say: "You never know how strong you are until being strong is your only choice." Reggae forever.