Jeremy Goldstein has a stake at Jeremy L. Goldstein & Associates LLC which is a boutique law firm devoted to guiding compensation committees, chief executive officers, and corporations. It also guides management teams in executive corporate governance issues and compensation; mainly as such matters come up regarding transformative business events and sensitive circumstances, holds that this option has benefits if one looked at it keenly.
In the recent past, a lot of corporations have ceased offering their employees stock benefits. Such decisions have largely been informed by reasons of financial constraints. Some situations, however, are more complex. Jeremy Goldstein sheds some light on why many companies might cut the stock option by advancing three key reasons.
- If the stock values drop substantially, it might be an uphill task for personnel to use their stock options. But, businesses are obligated to report on their allied expenses. It is these expenses that make stakeholders face increased danger of overhang.
- Because of the unpredictable nature of stock stability, workers have grown apprehensive and are therefore avoiding this model of compensation. The risk that overturns pose is real, and the employees have identified this as something that can make their stock options worthless.
- The option also introduces a likelihood of increased accounting burdens, which can sometimes exceed the financial advantages of the derivatives. Employees deem the stock option to be unattractive compared to the rise in salary that they could receive if the stock alternative were removed.
Jeremy Goldstein is of the view that the stock option might favor a business since it is advantageous as compared to additional wages, better insurance coverage or equities. As a result of this, there is a high probability that employees will appreciate the stock options. Moreover, the options offer a value that in uniform for all the personnel.
According to Jeremy Goldstein, the stock value becomes even better with the rise of the companies share prices. The stock option can motivate to improved output, and work performance as the employees are motivated to source for more clients, preserve the current clients, and develop new concepts for business development, because their stock option rises in value as the company grows and makes profit.
In comparison with the equity option, Jeremy Goldstein advocates for corporations to use stock option. Goldstein strongly believes that the stock option is best suited when companies are developing top executive compensation plans. The tax burden that comes with shares is eliminated, when a company chooses to use the stock option.
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