Stocks represent claims of ownership to the company’s assets and earnings. Companies in the recent past have withdrawn stock options for their employees. This is a result of some major complex reasons, forcing companies into taking this route. The company’s stocks may go under, and this makes it quite hard for the company to provide stock options. Stocks going down also exposes the stockholders to what we refer to as overhang. Employees are now very aware of the outcomes of economic downturns. Accounting burdens brought about by the stock options render the costs greater than the financial gains.
Stock options are meant to boost one’s earnings, and they are easy to understand. They play the same role as additional wages or equities and in turn motivate the employees to work even harder. Stock options are often preferred to equities as there are some rules which make the provision of equities even more costly as compared to stocks.
Jeremy Goldstein has some good news for the employers. There are indeed ways to water down the disadvantages of offering stock options to your employees. To do this, you should implement strategies that do away or minimize costs and overhang. Jeremy recommends the use of “knockout,” a type of barrier option. It is safe in that whenever the shares fall below a certain amount; the employees lose the stock options. Knockout options allow company employees to earn when shares rise, and they lose the benefit whenever shares go under.
Onto the question, who is Jeremy L. Goldstein? A business lawyer and partner at Jeremy L. Goldstein and Associates LLC, a boutique law firm. The firm specializes in advising compensation committees, CEOs, and management teams among others. He has been involved in quite a number of large corporate transactions in the previous years. He has also worked as a Partner for 14 years at Wachtell, Lipton, Rosen, and Katz as from the year 2000-June 2014.
Mr. Goldstein also worked as an Associate at Shearman and Sterling LLP for one year, August 1999 to July 2000. He attended The Pingry School, Cornell University where he obtained a Bachelor of Arts, University of Chicago and attained a Master of Arts degree and finally at New York University School of Law and attained a Juris Doctor, Law. Turn to Jeremy Goldstein for employee benefits legal advice. Learn more: https://www.slideshare.net/JeremyGoldstein14/22nd-annunaspp-presentation-2014