Recently, companies have opted to exclude the stock benefits on their employees’ pay slip. Some firms claim that they slashed this option for the pursuit of saving more money, but with deeper analysis depicts more complicated motives and for different results.
Among the primary reasons cited as to why this happened is that;
Stock value fluctuates, and most employees nowadays are aware of this fact because they can easily access basic knowledge when it comes to stock markets and this makes them approach stock options cautiously. They do so either through attorneys such as Jeremy Goldstein or online journals. They know that compensation through this option could lead to more problems later when the economy turns south and rendering the stock worthless.
When the ultimate stock value deteriorates, this not only shuts off employees from accessing their due remuneration, it also means that the organization will still have to incur the reporting expenses.
Performing accounting for such stock options is a tedious practice which requires the employment of expensive resources. Most companies may be deciding to do away with stock options to avoid costs related to it in the expense of benefits associated with it. Besides, employees view such option as an obstacle to being paid higher salaries.
Nonetheless, the stock option has been proven time and again to be advantageous due to its simplicity and equitable. Jeremy Goldstein supports it as an employee benefit. It comes in handy when the company wishes to offer an additional wage option, more equities or even a comprehensive insurance policy.
Stock options can be a motivation to the employees to work harder in improving the company’s performance. Why? The well-performing company translates to rise in stock value. So the company success means a sizeable amount of share value at the end of the financial year.
Stock options ease the tax burdens. Lawyers like Jeremy Goldstein advice companies to go for the options instead of offering shares.
For a company to reap maximum benefits from the stock option, they should devise ways of minimizing the costs related to it. To achieve this, many companies are advised to assimilate an option known as ‘Knockout.’
With ‘Knockout‘ stock option is just similar to others in its category, but the holder will lose it if the share value falls beyond certain determinable amount.
This style of offering stock option reduces accounting expenses especially when the company’s stock is volatile. It also shields non-employee investors from the stock overhang.
Though Knockout option cannot solve every problem, it eliminates major challenges that companies who offer stock compensation option faces.
Who is Jeremy Goldstein?
Jeremy is a respected legal adviser when it comes to employee benefits. With an experience of over 15 years, Jeremy is also a partner at Jeremy L. Goldstein & Associates LLC, which is a boutique law agency that specializes in offering legal services when it comes to employee compensation.
The law firm serves companies top executives which include CEOs, committees, management executives among others. Jeremy obtained his law degree from the New York University School of Law.
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