Many companies like to offer their employees stock options as a form of compensation and many employees prefer this type of compensation over additional income. The reason is simple — if the company does outstandingly well, the employee will make a lot of money.
Jeremy Goldstein, a 15-year lawyer with plenty of experience advising companies over stock options, says that this type of compensation can be advantageous. It is in the employees best interest to see that the company succeeds so they make the most amount of money possible. This ensures healthy company morale and employee vigor.
But Jeremy Goldstein warns that there are drawbacks to this type of compensation. The long-time stock options lawyer says that when a company’s value drops significantly it can expose shareholders to overhang. Jeremy Goldstein recommends that companies begin to offer “knockout” options.
The experienced stock options lawyer explains that knockout options allow companies to withdraw stock options as compensation when the value of the company sinks too low.
This eliminates the risk of hangover for shareholders and makes the company more attractive to outside investors. The company is no longer a risky investment.
According to Crunchbase, Jeremy Goldstein states that there is some upside to knockout options for employees. It gives extra incentive to the employee to see that the company remains solvent, healthy and valued at a high price.
If the stock value drops too low for more than a week, the employee risks losing that compensation.
Mr. Jeremy Goldstein is a lawyer from New York City who serves as a consultant to companies over employee benefits packages. Serving as a business lawyer for more than a decade, Mr. Goldstein has established his own law firm after working as a partner in a similar firm.
He has advised such top companies as Verizon, Chevron, AT&T, Duke Energy, Bank One and Merck.