Many corporations are turning away from giving stock options to employees. Jeremy Goldstein knows why and explains a solution. Employees are concerned about this form of compensation as the stock may drop and render their benefits worthless. Employers are concerned about the additional accounting problems that come with stock options as well as option overhang to stockholders.
Despite the problems, stock options are still comparable or sometimes better to many other types of employer provided compensation. Stock options encourage employees to strive for the company’s success to achieve their own as their earnings only increase as their employer’s shares do.
To preserve employees receiving these benefits, Jeremy Goldstein suggests what is known as “knockout options“. These options are very similar to their traditional counterpart, except that employees lose the option id the share falls below a certain amount. For example, if an employee purchases an option at $100 per unit for a four year term and it falls below $50 for more than a week the option may expire depending on the contract details. This option prevents employees from being stuck in a contract with essentially worthless stock and also protects other investors from facing shrinking ownership shares.
Jeremy Goldstein currently acts as partner at Jeremy L. Goldstein and Associates, LLC, a law firm that specializes in advising compensation committees. He earned his Juris Doctor at New York University’s School of Law as well as a Master of Arts from the University of Chicago.
Jeremy Goldstein also serves as the director of Fountain House, a mental health organization located out of New York that assists those afflicted with mental illness. Fountain House helps these patients achieve success through participation in the community on professional and social levels. Jeremy Goldstein has been acting as director since January 2008.
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