As the economy continues to be unpredictable, companies both big and small have begun to no longer provide employees with stock options. Some companies do it to save money, while others are doing it for more in-depth reasons. Jeremy Goldstein believes there to be a few key reasons that have persuaded companies.
- When the stock value drops a massive amount, employees will not have the time and opportunity to execute the options they own. The company’s accountants are still required to report all related expenses. The stockholders will now face the risk of “option overhang.”
- Employees have learned about other forms of compensation. They have become aware of how a sudden collapse of the economy can turn their stop options worthless. Employees see these benefits as free play casinos, instead of real cash. These options will also be a massive burden on the accountants. When it’s all finished, some of the associated costs will eliminate any financial benefits.
However, there are some employees who believe this to be a better compensation form than equities or additional wages. This is because options are easy for all the staff to understand. Also the value of the stock is tied to the success of the company. Therfore, employees will work prioritize the company’s success and find ways to bring in new customers while maintaining current customers. Knockout options eliminate most of the stumbling blocks associated with stock driven compensation. Jeremy Goldstein has instructed companies to meet with auditors and discuss possible consequences of offering this type of compensation. Goldstein also encourages companies to wait at least half a year before offering new options, or it might leave them with a negative quarterly financial statement.
Jeremy Goldstein has become one of New York’s most respected lawyers. Jeremy Goldstein is currently the co-founder and partner of Jeremy L. Goldstein and Associates LLC. This boutique law firm specializes on corporate governance and executive compensation. Jeremy Goldstein has more than 15 years of experience as a business lawyer. Prior to starting his own firm, he was partner at Lipton, Rosen and Katz from 2000 to 2014.
He has played key roles in major corporate transactions that have involved many top companies such as AT&T, Chevron, Duke Energy and Verizon. Jeremy Goldstein earned his bachelor of arts from Cornell University and his master of arts degree from the University of Chicago. Jeremy Goldstein later earned his Juris Doctor degree from New York University School of Law. Learn more: https://thereisnoconsensus.com/jeremy-goldstein-explains-knockout-options-help-employers/