The reason tech companies rely heavily on stock-based incentives is to align the interests of the employee with the shareholder. You want the group to have a shared fate. Cold, hard cash, while attractive to people who haven't yet joined, doesn't align interests as well as stock does.
They can always take the upthread suggestion of repricing options, or issuing RSU.
I'm really not seeing any employee downside other than some punctured dreams - and I don't see how those dreams would have been any less punctured if they had IPO'd at $10 and moved to $18.
