Not many years ago that a significant number of companies opted to terminate providing their staff with stock options, other firms intentionally did this to reduce cost on this operations. However, others were compelled to do so due to more complex reasons. Below mark three key challenges which Jeremy Goldstein considers to drive firms to eclipse these benefits.
First, the stock value will go down hence making it difficult for employees to exploit their options. This renders most businesses to ensure that involved expenses and stockholders will not incur the loss posed by the option overhang.
Secondly, a significant number of employees have developed wary over this compensation criteria as they are aware that the economic challenges faced making options to be of low value. These options usually are likened to casino tokens more than any amount of cash.
Lastly, options end up in a substantial degree of accounting burdens this is resulted by the relevant costs which have high chances of declining of the financial advantages of the derivatives.
Jeremy Goldstein believes this mode of compensation is suitable for additional wages, equities or standard insurance coverage since they are simple and accessible to employees to comprehend stock options efficiently and they offer something of equal value to the entire staff. Options promote personal earnings when the corporation’s share values increase. This has seen people prioritizing the firm’s well-being and success also, employees put more effort to meet all the firm clients, attract customers and create a platform for developing new ideas.
Jeremy Goldstein is an attorney with high experience of over 15 years of experience as a business lawyer, who partners with Jeremy L. Goldstein $ associates LLC, a boutique law committed to offering legal advice to compensation committees, CEOs, management personnel and corporations who require executive compensation and governance issues.
Mr. Jeremy has contributed significantly in handling principal transactions that comprise of top firms such as Verizon, Chevron, Duke Energy among others. Jeremy Goldstein has worked on the boards of prominent law journal also a nonprofit company called Fountain house.
Follow Jeremy Goldstein on twitter.