Jeremy Goldstein, partner at Jeremy L. Goldstein & Associates, recently offered some great advice for employers and company leaders: offer knock-out stock options.
During his time as a business lawyer, Goldstein has worked with company such as Verizon, ALLTEL, Goldman Sachs, Chevron Texaco, Kmart, Sears, and dozens of others. With his expertise in M&A(Mergers & Acquisitions), he has assisted in the mergers of many big companies. He worked on the Kmart & Sears deal, the Chevron Texaco & Unocal deal, and the Verizon & ALLTEL deal.
With his expertise in M&A, he found himself working with the American Bar Association as the Chairman of their Mergers & Acquisitions subcommittee.
His background in business law makes him a perfect candidate to give advice concerning stock options. Goldstein says it is becoming far too common for companies to not offer stock options. If businesses changed their plans for stock options, instead of cancelling them completely, they could benefit from a wide variety of benefits. For one, employees who are financially invested into the company will work harder to create improvement in the company. Second, the employee will be excited to hear the company doing better. This increases morale.
When a company goes through a financial crisis, companies may cancel their stock options. When the company improves financially, often times, they do not offer stock options again. According to Goldstein, this isn’t a good idea.
Goldstein educated his readers on a new stock option plan called knock out options. He warned that knock out options don’t sold all problems, but they do help with many obstacles surrounding stock-option based employee payment.
Knock-out options are stock options that are capped both ways and is time limited. For example, lets say an employee is given stocks at 20 dollars per stock. The stock is capped at 40 dollars and bottoms out at 10. If the stock ever falls below 10 dollars, the employee loses the stock;however, if the stock reaches 40 dollars, the employee must sell because this is the maximum profit. Goldstein advises not to terminate an employee’s stock unless the company’s price stays down for extended periods of time.
Advice like this is precisely why so many corporations come to Jeremy Goldstein for counsel. Learn more: https://www.quora.com/profile/Jeremy-Goldstein-20