Over the past few years, numerous corporations have stopped providing stock options as an employee benefit. It’s not fully clear why so many are eliminating stock options, but there are three recurring reasons. First, employees and employers are uncomfortable with stock values dropping too quickly.
It only takes one bad day to make a stock worthless, meaning no one can exercise that stock. If the option can’t be used, there’s no reason to keep offering stock options. Even if things do work out, there’s still the risk of option overhang, and shareholders are responsible for that.
That leads to the second reason: employees don’t want stock options anymore. A lot of corporations are eliminating stock options because their workforce wants more relevant and manageable benefits. Every time the economy spirals down, stocks are rendered worthless, making stock options more like casino tokens; only valuable as long as the casino recognizes them.
The last main reason corporations stopped providing stock options involves the hours of paperwork and accounting burdens. By the time everything wraps up, it might be more costly to provide stock options than eliminate them and offer something easier, like higher wages.
Regardless of a corporation’s reason, the trend is growing every day and very few people are trying to stop it. Jeremy Goldstein is is among the few experts fighting to keep stock options available to employees. He’s not suggesting that every company offer stock options; some can’t afford the tax burden and won’t survive.
He’s only suggesting that everyone at the top of the list rethink their employee benefits. It may seem easier to offer equities or better insurance coverage, but stock options come with more rewarding advantages. As the IRS adds to their rules, offering equities may soon become harder than providing stock options.
Jeremy Goldstein knows what he’s talking about; he’s been a business lawyer for nearly 20 years. Throughout his career, Jeremy Goldstein worked his way up the legal ladder and became New York’s go-to expert on matters involving employee benefits. A lot of companies take his advice to heart.
Mr. Goldstein established his own law firm, Jeremy L. Goldstein and Associates, after leaving a similar organization. Since then, he’s written numerous papers on executive compensation and spoken about corporate governance at several conventions. Learn more: https://www.quora.com/profile/Jeremy-Goldstein-20