Many corporations are stopping the provision for stock options for their employees. There are reasons for this trend, the main ones being:
o The stock market may not be stable leading to losses and making it an impossibility for employees to earn any money.
o Employees have developed some fear to this compensation option; they consider it as casino tokens, whose stability is not guaranteed.
Advantages and Solutions
The options boost personal earnings, especially where the company’s share value gets a tip. Employees prioritize the company and work harder, thus attracting more benefits. The only solutions for companies are to reduce overhang on the ongoing expenses and the recurrent ones.
When this strategy is adopted, a non-employees benefit since they do not experience overhang hence stakeholders have nothing substantial to worry about. The firm’s stock value is therefore protected.
What to Consider Despite the Options
The knockout route does not solve all the company’s ills and problems but only serve to cushion big problems. It is however encouraged that companies and corporations liaise with their internal auditors on the consequences of adopting these measures, and communicating the same to employees.
It is important for companies to wait for a period of 6 months more in order to consider all the range of options. This should be done especially when the existing derivatives have ceased to be in operation. Auditors and accountants should be specifically consulted in this area before any decision is made.
Jeremy Goldstein is an attorney, mainly sought after by big corporations and companies for advice and insight on matters regarding employee benefits and rights. He has practiced for more than 15 years as a business lawyer in New York City.
Brands Worked For
Goldstein has undertaken huge and important transactions with top notch companies in the commercial world like the Verizon, Duke Energy, Bank One, Merck and even A &T. Jeremy Goldstein is a member of several boards. He previously served for the Fountain House and the prestigious Law Journal.