Most companies are doing away with providing their employees with stock options as a form of benefit or personal compensation. Many businesses do this with the main reason being to save money while at the same time reducing overall expenses. Some companies stop the provision of stocks for other complicated reasons.
There are advantages to offering stock options to employees. Some corporations find the issuance of stocks economically viable as employees know and understand the value of these stocks, this leads to the stocks being valuable to company staff same as cash compensation would be.
The use of barrier stocks is another viable option. These stocks are commonly known as knockout stocks. Knockout stocks and common stocks are similar if a comparison of their vesting requirements and time limits on them is taken into consideration.
Jeremy Goldstein states that companies that want to issue stocks to its employees need first to adopt effective policies and strategies aimed at avoiding excessive costs. Additionally, these firms ought to minimize the company’s ongoing overhang brought by current expenses.
However, it should be noted that the use of knockout stock options can’t be used to solve every challenge facing the company. The use of knockout options can be used by firms to eliminate some of the most pressing problems brought about by stock-based personnel compensation.
Before opting for option-based employee remuneration, each respective company should make an appointment with an internal auditor who will comprehensively assess the viability and sustainability of using the company’s stock options as a way to compensate the members of staff. Letting the auditor in before making this decision is vital as the auditor can give the company’s executives details of the economic consequences of using stock options to compensate employees as per Jeremy Goldstein’s recommendations.
Jeremy Goldstein is the first expert that comes to mind when companies need professional advice relating to employee benefits. Jeremy Goldstein is a lawyer who boasts of more than 15 years’ experience in the realm of business law. Among Goldstein’s clients are AT&T Chevron, he has worked with these companies to facilitate highly sophisticated transactions.
Connect with Jeremy Goldstein on LinkedIn.