Over the past few years, large companies have begun to no longer give their employees stock options. Some companies say they do it to save money. Others are doing it for more complex reasons. There are several issues that have convinced employers that stock options are not worth it. Learn more: https://www.slideshare.net/JeremyGoldstein14/aci-compensation-committee-presentation-2016
- When the stock value drops, employees don’t have enough time to exercise their options. The company is still forced to report all related expenses, leaving stakeholders with the risk of option overhang.
- Employees don’t trust this kind of compensation. Employees have realized that these options can become worthless at anytime. They see these benefits as casino chips instead of cash.
- Stock options increase the burden on the company accountants. This can result in costs that negate any financial benefits. Most employees would rather receive a higher paid salary instead of stock or equity.
Stock options are still a good idea for employee benefits. Stock options are easier for employees to understand. With the value tied to the company’s value, employees will work harder at making the company successful. This will lead them to find ways to draw in new customers and keep existing customers happy. It’s less of a tax burden if companies offer options instead of stock shares.
Jeremy Goldstein has become one of the top legal advisers in New York. He’s an expert when it comes to corporate governance and executive compensation. Jeremy Goldstein is founder of Jeremy L. Goldstein and Associates LLC., a boutique law firm in New York. Throughout his life, he has been a key player in sever major corporate transactions that involved some of the top-tier companies such as AT&T, Verizon, Chevron and Merck. Jeremy Goldstein currently serves on the board of several nonprofits including the Fountain House, which provides housing for male victims of domestic violence.