Long-time Business Lawyer Jeremy Goldstein On Stock Option Compensation

Jeremy Goldstein has been practicing business law for 15-plus years. He has already achieved partner in a prominent business law firm and opened his own boutique law firm in New York City called Jeremy L. Goldstein and Associates LLC.

His extensive experience in business law includes advising companies such as AT&T and Duke Energy. He has also been right in the middle of some of the largest business acquisitions in history.

These include the acquisition of Goodrich by United Technologies, Duke Energy by Progress Energy, Sanofi-Aventis by Genzyme, Merck by Schering Plough Corporation, and The Dow Chemical Company by Rohm and Haas Company.

Jeremy Goldstein recently wrote a blog about employee stock options as a form of payment. He mentions three specific negatives. The first negative is disastrous for both the employee and the company. Learn more about Jeremy Goldstein:  http://officialjeremygoldstein.com/philanthropy/ and https://www.avvo.com/attorneys/10019-ny-jeremy-goldstein-978103.html#client_reviews

This happens when the value of the company plummets to a point where it is impossible for the employee to cash in their stock options.

The second negative concerns employee morale. Many employees have become wary of the stock markets and do not want anything to do with stock options. The final drawback is accounting burdens. The accounting of stock options may make this form of compensation prohibitive.

The positives include employee productivity. Employees are much more likely to work hard if they are invested in the company personally.

And the IRS has made it much more of a cost burden to share equity with employees making the stock option a much less expensive avenue for employee compensation.

Jeremy Goldstein recommends that companies look into knockout stock instead of regular stock options. The knockout stock option keeps all the positives while mitigating the negatives.

It does so by removing the employee’s compensation if the valuation of the company goes below a certain point for a week.

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Filed under: IRS