Major corporations are often faced with budget problems, that cause them to reduce spending/funding in various areas of the company. When referring to employee stock options, it gets even more complicated. According to Jeremy Goldstein, there are three major problems that cause companies to cease the concept of stock options:
1. Values of stock have a chance of dropping significantly, which in turn makes it hard for employees to exercise their options. With the risks of option overhang, stockholders are often faced with hardships on their investments.
2. Employees have recently shown little to no faith in this method of compensation. Changes in economic conditions cause stock options to lose its value, thus making it hard to trust in the long-term.
3. Options cause a significant burden on the corporation’s accounting. When costs exceed potential financial advantages,things become difficult. Corporations would rather eliminate stock options, and offer employees higher salaries.
By adopting the right strategy, companies can cut down these costs and still reap the same benefits, which is a win for all parties involved.
Jeremy Goldstein is a senior partner at Jeremy L. Goldstein & Associates, a firm that specializes in employee benefits and compensation. With over 15 years of experience as a business lawyer, Jeremy Goldstein has represented corporations across the country. He has been involved in major settlements that involved Chevron, AT&T and Duke Energy, among others.
Goldstein is the current chair of Subcommittee of the Executive Compensation Committee of the American Bar Association Business Section. His work has been recognized by top publications, with recent features in Chambers USA Guide to America’s Leading Lawyers for Business and The Legal 500. He often speaks on topics ranging from executive compensation to corporate governance. When referring to legal experts, Jeremy Goldstein is a staple in his field.
Visit http://jlgassociates.com/ to learn more.