Providing the option of stocks to employees is a way dealing with short-term financial shortcomings for many companies. However, the practice is fast hitting a dead end. According to one of the most experienced advisers on the issues of employee compensation Mr. Jeremy Goldstein. There are three fundamentals that have tilted the playground.
Using Stocks to Compensate Employees; what’s changing?
Increased employee awareness is making the option unreliable. Since most modern employees know that stock prices can tumble, it would be hard for companies to convince its workers to take stocks in the place of anticipated compensations. Secondly, the possibility of stock prices slipping so low that the stockholders will be faced with overhang is high. Finally, swapping compensation with stocks generates a complex accounting process that may end up making the option more expensive than the actual material compensation. Nevertheless, Mr. Goldstein maintains that the option of stocks remains useful especially with regard to extra wage payouts, improved insurance and equities.
What Jeremy Thinks Employers Should Do; In the Wake of Shareholder Activism
According to Mr. Goldstein, the business world today is filled with shareholder activism. Shareholders are becoming ever more demanding. He points out that it is important for companies to review their schemes for the compensation of employees in order to meet the demands of their shareholders. Jeremy Goldstein gives a raft of options for employers to adjust effectively to the changing market scenarios.
Control over Payments
The amount of money that a company decides pay its shareholders can be a bone of contention. If a company’s say on the payment amount is defeated, it may cause mistrust between the company boards and the shareholders. It is, therefore, important to stay ahead of the game by engaging the shareholder’s throughout the year of business. Once the shareholders are fully aware of the facts surrounding payments, it becomes easier to stave off the shareholder activism.
Stocks, Are They a Good or Bad Compensation Option?
Goldstein advises that the option of stocks is only helpful to the stockholders if the value of the shares of a corporation rises. If employees are stockholders, they tend to work harder and with greater dedication because they know that they have a stake in the final whole. Furthermore, he notes that the tax burdens may increase if companies choose equity over stocks for their employers. The stocks option is still a great one, nevertheless. Jeremy Goldstein opines that despite the increasing resistance to using stocks as a compensation alternative it is a useful tool as long as a company works proactively to reduce the risk of overhang. He concludes that the risk of prices plunging is overridden by the overall potential benefits to both the employees and the company.
Summary of Jeremy Goldstein’s Background and Career
He is an expert in employee compensation and corporate governance. He has engaged with a great number of compensation committees of large organizations to chart out the best options for employers in dealing with settlements for their employees. He founded the Jeremy L. & Associates legal firm; a legal entity that has been involved in some of the most significant commercial mergers and deals in the USA. Learn more: https://www.crunchbase.com/person/jeremy-goldstein#/entity