Stock options have become one of the famous compensatory tools used by companies for their employees. Still, more companies are doing it in today’s competitive world for many reasons. Among the many options, there are three that are the most prevalent. The first being the fear of the stock prices to drop and the employees still cannot exercise their options. The companies need to report it as expenses and results in option overhang. Another reason is that more employees are looking for something substantial such as cash rather than stock options. The last being that the accounting system for the distribution of stocks is complicated and not every company has such resources.
Even though there are many cons to stock options, they offer many advantages that cannot be overlooked. They allow employees to consider the company as its own and to work for its benefits to ensure that its stock value increases. Offering stock options to the employees also allow companies to pay less tax to the government. Another method to overcome the cons of stock options is the knockout strategy. This strategy allows the stock options to completely disappear in case the stock value goes below a specified point.
Jeremy Goldstein runs a successful law firm in New York and is a specialist in employee benefits. He advises his clients during mergers and acquisition since it is the time when the compensation package has to be completed revised. He also has many start-ups as his clients who need to design their compensation packages from the bottom up. Before starting his own venture, he was a partner at the Wachtell, Lipton, Rosen & Katz.
Jeremy Goldstein has a long list of clients that seek his advice on their company’s matters. Some of the big names include Bank of America, Goldman Sachs, Dow Chemical Company and many others.
Follow Jeremy Goldstein on twitter.