As a result of the economic recession and continued shaky economy, companies across the country have begun no longer offering employees stock options as incentives in their benefits packages. A few companies have said they quit offering them to save money. There are three main concerns that have convinced employers to ditch stock options.
- Should the stock value plummet for any reason, employees will not be able to sell their options. Corporate bookkeepers have to file all related expenses while opening up shareholders to the possibility of “option overhang.”
- Employees have begun to be uncomfortable with an unstable type of compensation, which are as a reward for the employees work. Employees now realize that the economy can affect stock value, causing their options to become worthless at any time. Employees have compared the stock options to the casino tokens as opposed to real cash rewards. Learn more here: http://officialjeremygoldstein.com/
- Stock options require accountants to keep track of them. The costs may outweigh any potential benefits. Employees prefer increased salaries instead of options. By eliminating options they can afford to give pay raises.
Other employees still would prefer stock options over increased pay, for those employees that have an interest in insurance coverage for their families. Those who prefer stock options are ones who have a grasp on how stock option benefits work. With stock options, each employee has the same type of compensation.
Jeremy Goldstein is a business attorney with more than 15 years of experience. He specializes in corporate governance and executive compensation. He co-founded Jeremy L. Goldstein and Associates LLC, which is a law firm based in New York. Jeremy Goldstein has been a part of several financial transactions involving several major companies including AT&T, Verizon, Bank of America and Chevron. Jeremy Goldstein has been featured in several business journals.
Jeremy Goldstein is a renowned business attorney with more than 15 years of experience. Jeremy has played significant roles in various major transactions involving different large companies in the world. He has contracted with Chevron, Verizon, AT & T, Bank One, Duke Energy and Merck among others in offering legal advisory services. He currently serves as a law journal and also Fountain House, non-profit organization as a board member.
Jeremy Goldstein offers excellent legal advice to the compensation committee and ceos. Therefore corporations and companies seek legal advice from him regarding employee`s benefits. He opened a law firm in New York to serve his clients best after being in the same experience as the partner at Lipton, Wachtell, Rosen & Katz law firm.
Jeremy Goldstein explained how the knockout option is beneficial to employers. He said that corporations had stopped providing their employees with stock options. Although some businesses took that direction to save money and others due to more complex reasons including the drop of stock value, economic unrest which makes the option worthless to employees during compensation or due to accounting burdens.
If the company wishes to continue awarding stock options to its employees consistently, it can gain some benefits and avoid more costs by using the right strategy.The company needs to minimize overhang alongside initial and ongoing expenses. Jeremy Goldstein gave out knockout plan as the tool to embrace any barrier option. The choice is same as the stock option although the employees lose the compensation if the share value goes below a specific amount. Where the corporation`s stock is volatile, the knockout option reduces initial accounting costs.
However, when firms employ knockout mechanism benefits, unemployed investors don`t face overhang threats. That is, the existing stockholders still have a cake to bite from the compensation plan. Moreover, the knockout option often leads to lower executive compensation figures in a fiscal year. This clause makes the firm`s annual proxy to show earnings accurately which is appealing to shareholders. The knockout clause gives workers an incentive to prevent the company`s stock value from falling. Jeremy Goldstein continues to explain more on pros and cons of the knockout options and give his views from the professional perspective.
Jeremy Goldstein is a devoted partner at Jeremy L. Goldstein and Associates Law Firm that deals with advising compensation committees, management teams, CEO`s and corporation compensation as well as corporate governance issues. Jeremy chairs Mergers & Acquisition Subcommittee for the executive compensation committee of the American Bar Association Business Section.
To learn more, visit http://officialjeremygoldstein.com/.