Stock options have had problems which make them unattractive to many corporate organizations. They are no longer recommended as an effective way of workers compensation. It has negative effects on both the worker and the company. On the side of the worker, stock options are unreliable since they can lose their value at any time. We are living at a time when the global economic changes are happening unexpectedly. It is very easy to lose something that you thought you owned. To avoid such life surprises, workers are opting to stay away from them. It is better to settle for a higher salary than to settle for something which you cannot tell its future.
On the part of the company, stock options have been a nightmare at times. When they lose value and workers cannot execute them, the burden falls on the side of the employer to account for all the stock options. At times they have resulted in option overhang which is a scenario that affects the shareholders in a company. This is usually not good news for the company since it can tarnish the good name of the company. Many companies have already started offloading the stock options methods from the list of workers compensation that they offer.
Earnings per Share (EPS) is an incentives method that is also applied to by companies as a means of business payments. It is one of the most effective methods if it is implemented in the right way. According to lawyer Jeremy Goldstein, the challenge with this method is that some businesses do not have a management that can implement it successfully.
EPS can create business growth in a very simple way. If the earnings per share go up, the stock value will also good up. Investors will be attracted to the company. However, this method is liable to misuse by rogue business executives. It is simple to fake the stock value using the EPS method.
EPS can also cause favoritism in an organization. The management sets the metrics for performance and they can use this power to favor some employees. With EPS, CEOs and other senior executives are said to wield too much power.
About Jeremy Goldstein
A prominent lawyer in New York called Jeremy Goldstein has given companies a leeway on an option they could apply, that will eradicate the problems that they face with the stock options. The alternative is called knockout stock options. This method will protect the company from a stock overhang.
Jeremey Goldstein is an experienced lawyer dealing with issues of corporate governance and workers compensation. Jeremy Goldstein has a reputation for guiding large corporation such as Verizon and AT&T in making corporate decisions by the advising the top management on the steps to take. Learn more: https://corpgov.law.harvard.edu/contributor/jeremy-goldstein