The transition metal catalyzed ethylene polymerization in aqueous emulsion has been increasingly successful in the last couple of years. Water however adversely affects the polymerization process by (a) competing with ethylene for the binding site at the metal and (b) hydrolyzing the growing chain. Neutral salicylaldiminato and cationic diimine complexes of Ni and Pd with different substituent patterns are studied here by density functional theory to determine their propensity toward water complexation and hydrolysis of the growing chain. Experimental NMR studies have also been carried out on the protonolysis of the Ni(II)-based Grubbs catalyst. It is found that in general that (a) ethylene coordination is preferred over water coordination for both Ni and Pd catalysts and (b) hydrolysis of the metal alkyl bond is competitive to ethylene insertion.