Why are many corporations are suddenly not providing stock options for their employees? Jremy Goldstein believes that there are three reasons that employees have had their stock options taken away.
One of the reasons for the removal of stock is that the value of a stock can drop significantly and the firm can end up being charged fees for a stock that is not really worth very much. It is called option overhang and it is not something that firms like.
Another reason that this method of compensation can be risky. An option is great when the economy is doing well, but it can easily lose value if the economic hits a downturn. An option can seem as risky as playing blackjack in a casino.
A firm’s accounting department are not fans of stock options. The accountants have to keep track of the fees that they pay for options and they may find the costs of a stock option are more than it is actual worth. By eliminating the stock option, they might actually be able to pay their staff more since that money is no longer going to pay stock option fees. Learn more:https://www.slideshare.net/JeremyGoldstein14/aci-compensation-committee-presentation-2016
Who is Jeremy Goldsten? He is the partner of a boutique called Jeremy L. Goldstein & Associates LLC. It specializes in corporate financial issues. If a person or a corporation needs aboud advise about compensation committees, Chief Operating Officers, executive compensation and the governance of a corporation, this firm would be a good place to go. Before starting this firm, he was working as a partner at the legal firm of Wachtell, Lipton, Rosen & Katz,
Goldstein has played an important part in transactions that have involved major corporations like Chevron, Verizon, AT&T, Duke Energy, Bank One and Merck. He is the board member of an important journal and a non-government organization called Fountain House.