Knockout options may just be the next big thing for employers according to top New York lawyer Jeremy Goldstein. More and more employers are discontinuing giving their employees stock options due to multiple factors. These include the uncertainty of not knowing what will happen with them, like flipping a coin. Due to what is happening in the economy, stocks can be worth a lot, or nothing at all. They also can be a huge problem for the accounting department, and may not be worth it in Lastly, the stock options can drop so much that employees cannot exercise them anymore. They would rather be paid a higher salary, then receive options.
On the bright side, stock options have a lot to offer. They are very easy to understand and are seen as good compensation. This also means that employees will work hard to make sure the company is successful, because they have a personal stake in it. If the company is doing well, stock options will rise, thus benefiting employees. It is a group effort, and everyone gets to win. It is harder to tax stock options rather than shares. This is why top executives prefer this type of compensation.
Knockout options are one of the safest bets for employers. They are like other stock options but they have a few differences. First, when they drop below a certain amount employees lose them. Employers can also cancel them, so they don’t have to worry about overhead costs, accounting problems, and stockholders down have to stress about additional costs from the knockout options that traditional stocks have. With knockout clauses it’s easier to document top executive earnings. It appeals more to stockholders in a positive light. Lastly, it encourages employees to work hard on the company’s success. If the knockout options fall below a certain number, they will lose them.
New York University School of Law graduate Jeremy Goldstein was named top executive compensation lawyer by The Legal 500 and Chambers USA Guide to America’s Leading Lawyers for Business.
Jeremy Goldstein is a partner at Jeremy L. Goldstein & Associates which he founded in 2014. He is a member of the Board of Directors for a recovery center dedicated for men and women with mental illness called The Fountain House.
Visit http://jlgassociates.com/ to learn more.