A number of corporations have in the recent years, made a decision to stop the provision of employees with stock options. This is due to a number of problems including the possibility of stock value dropping significantly making the employees unable to exercise their options, employees becoming wary of this compensation method and options resulting in a considerable accounting dilemma. This compensation method though, still has its advantages over equities and additional wages.
One of the advantages, as Jeremy Goldstein explains, is that stock options provide all employees with something of equivalent value. Furthermore, if the corporation share value rises options boost the employee earnings thus employees are motivated to work harder for the company success. Options reduce the company tax burden that could result from the provision of shares.
According to Jeremy Goldstein, the knockout strategy is the best option available if a company wants to continue with the awarding of options to employees gaining from the benefits and avoiding excessive costs. Knockout options have vesting requirements and time limits similar to their counterparts but employees lose them with the share value falling below a certain specific amount. The knockout mechanism reduces the initial cost when the firm sock is comparatively volatile. Although it does not offer solutions to all problems, at least the knockout options banish many of the obstacles.
About Jeremy Goldstein
Jeremy Goldstein attended the Cornell University for a degree in Bachelor of Arts, History and The University of Chicago for a Masters of Arts, History. He is currently a partner at Jeremy L. Goldstein & Associates LLC since June 2014.
Jeremy Goldstein served as an associate at Shearman & Sterling LLP between 1999 and 2000 and joined Wachtell, Lipton, Rosen, and Kartz firm as a partner between July 2000 and June 2014. He is a philanthropist as the director Fountain House that offers social services from January 2008 to present.