Jeremy Goldstein’s 3 Reasons to Offer Knockout Options

Many companies have taken stock options away from their employees. The thought was that offering the option was costing too much money, not benefiting the company at all. That is not necessarily true. Jeremy Goldstein offers a few suggestions to show why offering stock option could be better than increasing pay or insurance coverage.

 

 

  • Stock options are easy to understand
  • An option’s value only increases if the share value of a corporation increases, giving employees incentive to put the company’s needs first.
  • Due to some existing IRS rules, the tax burden could be lighter for a company to supply staff members with options.

 

 

Jeremy Goldstein explains that a “knockout” option benefits both sides. It keeps a time limit but will expire if the share value drops too low. Non-employee shareholders are also protected from overhang. The knockout option looks better to shareholders because executive compensations are lower, resulting in a more accurate yearly earnings report.

Jeremy Goldstien has been a business lawyer for 15 years. His firm, Jeremy L. Goldstein & Associates LLC, is based in New York. Before starting his own firm he was a partner at Wachtell, Lipton, Rosen & Katz.

Currently Jeremy Goldstein sits on the board of a non-profit called Fountain House to aid those mentally ill. He has been a part of several large corporate transactions which include SBC Communications Inc./AT&T Wireless Services, Phillips Petroleum Compnay/Conoco Inc., and Duke Energy/Progress Energy, to name a few. He speaks and writes often often about corporate governance and executive compensation issues in several periodicals.

Visit http://jlgassociates.com/ to learn more.

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