Jeremy Goldstein explaining knockout options to corporate executives

Companies have begun eliminating stock options from employee benefit packages. Some companies are doing so in order to save money. However, there are other reasons and tend be more complex. Three major concerns arise that convince companies to stop offering stock options.


When the stock value drops suddenly, it will make it nearly impossible for employees to execute their options. Despite that, corporate accountants still must report all associated expenses. This also opens up stockholders to the risk of option overhang. Learn more:


Many employees dont want to take the risk of this type of compensation method. Many employees know that sudden economic declines can turn these options worthless. Employees see this type of compensation as casino chips more than physical cash.


Companies also do not like stock options because they can cause massive accounting burdens. The related costs often negate any financial advantages of the derivatives. Some employees don’t see this benefit as valuable as increased wages, which employers could offer if stock options were eliminated.


Despite the critics and complaints, there are some advantages. It’s still a preferred type of compensation when compared to increased wages, equities or more insurance coverage. Stock options are easier for staff members to understand. The are also something given to all employees that are of the same value. Stock options also only boost personal income if the company’s share value increases. This gets employees to work harder and keep the company growing successfully. Employees will also work at keeping current customers and bringing in new customers.


For those companies who still want to award options to employees, Jeremy Goldstein suggests offering knockout options. Knockout options are very similar to regular options. However, employees will lose them if the share value falls below a set value.


Jereremy Goldstein is a corporate lawyer who specializes in corporate governance and executive compensation. Goldstein has over 15 years of experience as a business lawyer. Jeremy Goldstein established his own law firm after working as a partner at another firm. Holdstein has been a key player in many corporate transactions that involved many top-tier companies such as Verizon, Chevron and Duke Energy.