Several employers have stopped offering their employees stock options to the business as a means of compensation for employment. The reasons are more complicated than just saving the company money. Jeremy Goldstein has listed below three main problems that convince employers to make this cutback:
- If the stock market drops it will make it difficult for employee to redeem at purchase value
- Economy down times can make stock worthless
- Costs may outweigh benefits
However employees may still prefer this option to wage or benefit compensation because it is easy to understand stock options and it proves compensation that is of equal value. Another good reason for employers to give employees stock options is that employees know their wages have a better chance to increase if the stock values increase, with this in mind, employees have an incentive for working harder to ensure the company’s success; as well, they will make it a priority to keep existing customers pleased and this will draw the attention of new customers.
Taxes can be another downside to offering employees stock options. A business can sometimes face a big tax headache if their employees are offered shares rather than options.
However, Jeremy Goldstein advises that if a company wants to maintain these award options and avoid any extra expenses, they must lock in with a barrier called “knock-out”. Everything is the same, with “knock-out” as with other stock options, such as vesting and time limits; however, if the values drop to a certain level, the employees may lose them.
“Jeremy L. Goldstein has a Juris Doctorate from the New York University School of Law; an M.S. from the University of Chicago; and a B.A. cum laude and with distinction in all subjects from Cornell University.”
Jeremy L. Goldstein is one of the partners of a boutique law firm called, Jeremy L. Goldstein & Associates, LLC. This law firm is in the business of advising committees on employee compensation and other sensitive financial issues.
Before starting his own law firm, Jeremy Golstein was partner with Wachtell, Lipton, Rosen & Katz law firm. He has been a part of several very large corporate dealings occurring within the prior decade.
Mr. Goldstein is a current chair of the “Mergers & Acquisition Subcommittee of the Executive Compensation Committee of the American Bar Association Business Section.”
To learn more, visit http://officialjeremygoldstein.com/.