Jeremy Goldstein On Knockout For Employers
Jeremy L. Goldstein is a founder and partner of Jeremy L. Goldstein & Associates LLC. It is a law firm specialized in counseling compensation committees, CEOs, management groups. It also advises corporations in corporate governance constituents. Jeremy L. Goldstein is a graduate of the New York University School of Law.
Jeremy. L Goldstein has been a participant in many of the largest corporate transactions of the last decade. Some of them include the acquisition of Goodrich by United Technologies, Duke Energy by Progress Energy, and the merging of Phillips Petroleum Company with Conoco Inc.
In recent years numerous corporations have stopped providing their employees with stock options. Some do it to save money, but it’s not always the case. There are three reasons for companies to cut on these benefits:
- The stock value may plummet.
- Employers know that the economic downturns make these options worthless.
- These options result in accounting burdens, as the relevant costs may eclipse the financial advantages.
Stock options have many advantages that overweight the ones gained through additional wages, better insurance or equities. One of the reasons for this is the simplicity of stock options for the staff members, as they are the same for all employees. Stock options also raise personal earnings as long as the share value of the corporation rises. This presents the company in a positive light which can encourage and motivate staff members to a better performance. In the case of equities, some rules of the Internal Revenue Service make it harder to supply employees with them. This is especially true for top executive staff members. Also, the taxes are often higher than the ones paid for stock options.
The solution to using stock options is to minimize the overhang and the initial and ongoing expenses. There is a barrier method for stocks known as “knockout.” Knockout stocks have the same time limit and vesting requirements as standard stocks. The only difference is that employees lose them if the shared value drops under a certain amount. If the share value drops for a few hours or days, employers can set stock options in such a way that they get canceled only when the shared value is low for a longer period of time. The knockout option can reduce initial accounting costs since each option is valid for only a short period. Existing stockholders have less worry regarding ownership shares shrinking. In the yearly disclosure documentation, knockout clauses have lower executive compensation figures, which reflects the annual proxy more accurately. The knockout solution to stock options is a great way to stimulate employees to keep the share value of the company above a certain threshold.
Though knockout is a good solution to stock options, officials still need to be clear on all the details around supplying such options to employees. It is advisable for businesses to provide new options only after a six-month period has passed since any changes can affect negatively the quarterly financial statement and be treated by accountants as repricing expenses.
The New York State Bar Association (NYSBA) which is a go to Lawyer Referral and Information Service (LRIS) for New York residents for the past 35 years, has launched a 24/7 online portal for confidential legal services. The portal was developed in collaboration with Legal.io, a national provider of marketplace referrals for the legal industry. Residents of New York can now choose to either continue using the LRIS telephone service or conveniently search from the website for a reputable and highly experienced lawyer for their legal matters.
The lawyers enlisted in the database have had their credentials reviewed by the NYSBA to ascertain they only provide the most trusted legal services. According to the CEO of Legal.io, lawyers from New York will be able to upscale their legal services to a large online population at an affordable rate.
How the online legal portal works:
A client visits the NYSBA website, fills in a confidential form that requires them to describe their legal need and location and submits it. Once the questionnaire form is received, it is reviewed and matched with the most suitable lawyer conveniently located within the client’s location. If a request is received from any of the 17 states with a locally run referral service, it is forwarded to the county bar association.
Referrals are free, but a fee of $35 is charged for the first 30 minutes of consultation. Exceptions for the consultation fee are made if the issue is a personal injury, medical malpractice, military law, social security, or worker’s compensation. No one is under obligation to retain the lawyer following the initial consultation. Additional attorney fees are deliberated between the lawyer and client.
About Jeremy Goldstein
Jeremy is the founder of Jeremy L. Goldstein & Associates, a boutique law firm that provides legal advice on executive compensation matters that arise from mergers and acquisitions. Jeremy Goldstein offers CEOs, compensation committees, and corporations legal help on sensitive issues about their corporate governance. He has extensive experience in many significant transactions, and prior to starting his firm, he was a partner at Wachtell, Lipton, Rosen &Katz law firm. Mr. Jeremy Goldstein has a law degree from New York School of Law and an M.S from the University of Chicago.
Jeremy Goldstein is the chairman of Mergers & Acquisition Subcommittee of Executive Compensation Committee, a member of Professional Advisory Board of NYU journal of law and Business, and a Director of Fountain House dedicated to adults recovering from mental illness.
Visit his official website and LinkedIn profile