"Why do we have to "pay" for lack of success?"

Because you are paying people to work. Do you have to pay your doctor if he operates and finds out you have cancer, or your lawyer if your ex cleans you out anyway? Yup.

Besides, if the permit does not come through, their options granted are as worthless as your stock. So options are actually an incentive for success. Sure beats giving them a bunch of cash until we run out.