Over the past years, many corporations would provide their employees with stock options. They did so because; this type of compensation was cheaper as opposed to additional wages, equities or better insurance coverage. The options would also boost personal earnings if a corporation’s share value increased, and by giving them the options, they were able to avoid certain Internal Revenue Service rules that made it difficult to supply employees with equities.
However, in the recent years, most of these same corporations are backing out of the trend. The problems that have led to them abandoning the trend include a drop in the stock value. This would mean that the employees would not be able to exercise their options. Furthermore, numerous employees have become cautious of the stocks, and the options result in significant accounting difficulties.
However, problems are not to be avoided but rather, solutions sought. The solution for the problem with stock options with most corporations would be to embrace a barrier option called ‘Knockout.’ Here, the stock options will still have the same time limits and vesting requirements but with an added advantage in favor of the corporations. The workers lose them if the share value cascade under a particular value and the drop stay that way over a certain period. Jeremy Goldstein explained this.
Jeremy Goldstein is the go-to attorney when corporations need legal advice regarding employee benefits. Goldstein is a partner at Jeremy l. Goldstein & Associates, a law firm specializing in advising compensation committees based in New York.
With more than 15 years of experience as a business lawyer, Jeremy Goldstein has played significant roles in essential transactions like Merc, AT&T, Bank One, Chevron, and Verizon. Currently, Jeremy Goldstein serves on the boards of a prominent law journal and a charitable foundation known as Fountain house.