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Jeremy Goldstein and the dilemma of stock based employee compensation

Corporations used to give stock options to the employees, but this practice is slowly declining. According to Jeremy Goldstein, the root of this problem is more complicated than just the desire to save money.


Jeremy Goldstein is a renowned lawyer who is the owner of a law firm named Jeremy L. Goldstein & Associates LLC. The company specializes in giving counsel on matters relating to corporate governance and executive compensation. He, especially, advises on issues that arise during events such as corporate transformation. Goldstein has numerous achievements in regards to major corporate events. He has played a significant role in a number of the biggest company transactions. These include United technologies acquiring Goodrich, Duke Energy/Progress Energy, and the list could go on and on.


Mr. Goldstein’s wealth of experience in these matters and his achievements enabled him to become the chairperson overseeing the Mergers and Acquisition Subcommittee that is carried out by the Executive Compensation Committee of the American Bar Association Business Section. Mr. Jeremy was named a leader among executive compensation lawyers in the legal 100. Mr. Goldstein, having gained so much wealth, is also involved in charity. He is also on the board of directors who oversee the Fountain House charitable trust used in helping mentally ill men and women recover.


These problems are that Jeremy helped explain include; the stockholders may be unable to realize the worth of their options when the value of their stock drops. For instance, during economic downturns which render them worthless. These factors make the stocks seem more like gamblers than safety nets.


Companies at times given accounting for the options which are usually a significant burden.


However, the stock options are easily understood. They encourage productivity among the workforce who understand that the value of their stock rises when the company performs well.


As a solution, Mr. Goldstein suggests that employers adopt knockout options. Under this plan, companies get to award options while still keeping excessive costs in check. The beauty of these is that they offer all the same benefits but the employees can be rid of them if they stock falls beyond a stipulated amount. Being that stocks fall and rise periodically, these knockout options can only be canceled if the stocks drop and remain below that mark for at least one week. The shareholders are happy not dealing with overhangs. The employees, on the other hand, are incentivized to prevent a drop in stock value.


Mr. Goldstein adds that knock out options as a form of stock-based compensation are the better option. Companies should explain all ramifications of such options to their employees.


For updates, follow Jeremy Goldstein on twitter.

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