There are many factors to be considered when planning a corporation’s productive economic environment. A poor plan leads to infighting and a consequent lose of employee incentives. At the end of the day the loss is also felt by investors.
Jeremy Goldstein has worked for major companies like Bank of America and Goldman Sachs. He has experience on how to manage earnings per share and programs that are incentive based. He also advises on the use of these incentives in programs that pay based on performance.
Jeremy Goldstein went to Cornell University for his Bachelors of Arts degree. He went to University of Chicago for masters in the same. Between 1996 and 1999, he graduated with a Juris Doctor in Law from New York University School of Law.
Earnings per Share (EPS)
When it comes to influencing stock price, EPS is among the biggest attraction to investors. This alone is a contributing factor to shareholders buying or even selling. In addition it incentivizes companies to top up what they pay out their staff. According to studies, when EPS is included in the pay structure, companies tend to be more successful. Though at first this appears to be a good thing, the competitiveness of trading allows entities to use EPS as leverage to make unfair advantage.
No to EPS
Those against the EPS have indicated that when it is used in corporations in most cases it gives too much power to the chief executives and dispenses with collective responsibility. This will in turn, according to opponents of EPS create favoritism or disfavor with some CEOs. With the CEOs in charge of the EPS, shareholders are not accurately informed of the value of the share as the metrics used in computing are influenced by the company bosses making them unreliable.
Others have also argued against EPS saying that its profitability is short term and hence it cannot be relied upon for long term growth and development of a company. Equally criticized is the performance- based remuneration. It is viewed as unreliable and capricious. Experts including Larry Fink have not shied from criticizing these metrics as they most certainly end up hurting companies.
Jeremy Goldstein suggests compromise between the pro and anti EPS. As opposed to discarding the incentive payment, which contributes to good working conditions, Jeremy Goldstein says companies should device ways of holding their CEOs and boards accountable. As long as the incentivized pay matches a company’s long term goals, it is not bad to have it.
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