As the economy continues to face uncertainty, employers are deciding to no longer offer employees with stock options. Employers are beginning to do this in part to save money. This benefit that many employees look for, is said to have three problems which convince employers to eliminate the benefit.
First, with the stock option, the value can drop significantly at any time, making it nearly impossible for employees to use their options. No matter what, the company is still required to report any expense related to it and current stockholders could possibly end up with stock option overhang. Another concern is that employees are being concerned with this type of compensation. They are aware that the value of options is strongly impacted by economic crises. Employees see this as playing the lottery. Options can create accounting burdens. The costs associated with options can sometimes negate the financial advantages of these benefits.
However, despite all the negatives, there are advantages to the stock options. Stock options are attractive to employees, because they are easy to understand. They are also preferred over additional wages, equities or even improved insurance coverage. Because the options are tied to company’s value, it encourages employees to work harder bringing in new money as well as working with current clients and even improve work services.
Jeremy Goldstein of Jeremy L. Goldstein and Associates has come out and offered up the idea of knockout options. The knockout option has the same limits as their other options. However, employees are not tied down to it. If the share value falls under a set amount, the employees will lose them. Goldstein’s solution to options, encourages employees to prevent a company’s stock value from falling.
Jeremy Goldstein is a top corporate lawyer based in New York. He has more than 15 years experience in corporate governance and executive compensation matters. He has been a key part in several major corporate transactions.
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