Over the years, corporations have begun to no longer offer employees stock options as part of their benefits package. Some companies have claimed its in order to save money. However other reasons have convinced corporate executives to get rid of stock options.
When the stock value faces a significant drop, employees don’t have enough time to sell their stock. Company bookkeepers are forced to report all involved expenses, which also opens up shareholders to the risk of “option overhang.”
Employees have also become concerned with this form of compensation. Employees have become aware that the economy dictates stock market events, which can sometimes cause their options to lose value. Employees have compared this to casino tokens instead of receiving actual cash.
By having options, accountants are forced to keep track of options. Also, costs often negate any potential gains made. Certain employees would rather receive pay raises in lieu of stock. Learn more: https://www.slideshare.net/JeremyGoldstein14/22nd-annual-naspp-presentation-2014
The ultimate solution to the standard stock option is known as the “knockout” option. These options are similar to regular stock options but if the share value falls under a set value, employees will lose the options. With knockout options, shareholders don’t face the possibility of overhang.
Jeremy Goldstein is a corporate lawyer who offers legal advice when discussing employee benefits. Jeremy Goldstein specializes in corporate governance and executive compensation. Jeremy Goldstein is founder of an independent law firm in New York. He earned his law degree from New York University School of Law.
Goldstein has been a key figure in many corporate transactions that involved many top-tier companies. Jeremy Goldstein has served on the board of a nonprofit called the Fountain House. Jeremy Goldstein is also on the board of a top law journal. Jeremy Goldstein continues to offer corporate legal advice to companies all over the country.