Top New York corporate lawyer Jeremy Goldstein is encouraging companies to continue to give stock options to their employees as part of their benefits packages. However, companies are cutting stock options as a way to save money among other reasons. There are three issues of concern that have caused employers to stop giving out stock.
- The value of the stock can fall at any time and to the point where employees are not able to execute their options. Because of that corporate accountants still have to report all related expenses, which opens up stockholders to the risk of option overhang. Learn more: https://www.americanconference.com/executive-compensation-836l17-nyc/speakers/jeremy-goldstein/
- Employees prefer to receive a pay raise. Employees have also realized that the value of their options can fall because of an unpredictable economy. Employees see stock options as casino tokens instead of physical cash.
- Stock options can cause massive accounting burdens. The related costs can negate the financial benefits of the derivatives. Employees don’t see options as valuable as pay raises. Companies can afford pay raises if they cut stock options. Stock options are quite complicated for corporate accountants. The best solution for companies who want to offer options is to provide knockout options. Shareholders dont face the threat of overhang. Employees will lose them if the value falls under a predetermined value.
Despite the critics, there are some strong benefits to offering options. Options are a type of compensation that is easy for employees to understand. They also offer something of equal value among all employees. Stock options only increase employee earnings when the company’s stock value rises. This encourages employees to make sure the company is suceeding. The staff will work harder to attract new clients, develop revolutionary services and please current clients.
Jeremy Goldstein is a top New York corporate lawyer specializing in corporate governance and executive compensation. He has overseen many corporate transactions involving many top-tier companies such as AT&T and Merck. Jeremy Goldstein is founder of a boutique law firm based in New York.