Of late, many establishments have done away with giving out stock options to their employees. These changes are being made due to the following reasons.
First, companies fear that if and when their stocks drop, employees will not be able to exercise their stock options and the resulting financial expenses will be major and the stockholders may also suffer options overhang.
Also, there is the issue that this form of compensation results in a series of accounting burdens. Furthermore, the employees themselves fear that in case of an economic downturn, the stocks would be rendered worthless and they prefer regular salary increases to the stock options. However, some establishments do away with this method in order to increase their savings.
On the other hand, this form of compensation has some advantages. Stock options encourage hard work in the employees as they are aware that an increase in the company’s revenue would result in an increase in the stocks and therefore an increase in what they earn.
With specific regulations, strategies, and rules, offering workers with stock options can be very instrumental in any company’s growth. Companies can also adopt the knockout options that can be left when the company is faced with financial challenges. The knockouts also reduce the initial economic costs associated with stock options. This alternative is strongly backed by Jeremy Goldstein as opposed to entirely doing away with stock options.
Jeremy Goldstein is a founder and partner at the Jeremy L. Goldstein and Associates Law Firm in New York. This firm specializes in issues of compensation and provides advice on governance affairs to compensation committees, company executives, management teams and major establishments. He graduated from New York State University with a J.D. Jeremy Goldstein is also a member of the board of the Fountain House and the Prestigious Law Journal.
He has been involved in the transactions of companies like Chevron, Duke Energy, Merck, AT and T and the Bank One. He has also previously worked in numerous law firms in New York and is the head of the United States’ mergers and acquisitions subcommittee. Jeremy Goldstein is the ultimate go-to lawyer in New York when it comes to matters like that on Stock Options. Learn more: http://www.chambersandpartners.com/USA/person/485609/jeremy-goldstein