As the economy continues to be unstable, large companies are beginning to no longer offer employees with stock options as part of their benefits package. Some companies claim its to save money, while others have complex reasons. There are three main concerns that have convinced companies to cut out out the stock options, saying they are not worth it.
- As the stock value drops, employees will not be able to sell off their stock options. Despite that, the company is still forced to report any expenses. This leaves the stakeholders with the possibility of option overhang.
- Employees have little trust in this form of compensation. They realize that options are tied to the stock market and could collapse at any time. Because of that, employees consider it as a form of casino tokens instead of straight cash. Learn more: https://thereisnoconsensus.com/jeremy-goldstein-explains-knockout-options-help-employers/
- Options can cause massive accounting burdens. The costs incurred could negate any financial benefits earned. Most employees would rather receive a higher salary instead of stock options.
Despite the critics, there are benefits to stock options. They serve as better incentives than increased pay or equities. Stock options are easier for employees to understand. Stock options value are tied to the company’s value. This leads employees to become more interested in the company and gets them to work harder to help the company succeed.
Jeremy L. Goldstein is a top New York corporate lawyer who has over 15 years of experience. He has is experienced in corporate governance and executive compensation. He is the co-founder of the boutique law firm Jeremy Goldstein and Associates. Jeremy Goldstein has been a key player in sever major deals that involved some of the major companies in the United States including United Technologies and General Motors. He is also serving on the board of Fountain House.