In the past years, various corporations have decided to seize stock options provision for their employees. Some of the firms decided to do that so that they could save money, but the reason for doing that is usually more complicated. Three main problems often encourage companies to curtail the benefits:
One of the reasons is that there may be a significant drop in the stock value hence making it difficult for the employees to exercise their options fully. Nevertheless, there is a need for businesses to report the associated expenses. The business stockholders also face the option overhang risk. Secondly, a lot of the employees have now become wary of this kind of compensation method. They understand that economic downturns render the options worthless more often. The benefits may be likely to resemble tokens of casinos more than cash. Thirdly, options lead to considerable burdens in accounting. Members of staff do not take this benefit more valuable than higher salaries.
Jeremy L. Goldstein is the Jeremy L. Goldstein and Associates LLC partner which is a boutique firm in law that is committed to advising compensation committees advising, corporations and management teams in executive compensation, CEOs and Corporate governance matters, mostly in issues that arise in the areas of transformative corporate events and other sensitive situations. Before he founded his own company, Goldstein was the partner at the law company known as Wachtell, Lipton, Rosen, and Katz.
Mr. Goldstein serves as the chair of Mergers and Acquisition Subcommittee of the section of American Bar Association Business. Mr. Goldstein often speaks and writes on executive compensation and corporate governance issues and is acknowledged as one of the executive compensation leading lawyer by The Legal 500.
Visit http://jlgassociates.com/ to learn more.