Compensation by stock option usually yields good results. The options push the employees to increase their productivity because their personal earnings are only increased when the overall value of the company increases. Again, they are easily understood by the employees. Even with that, most companies have shifted to other methods because sometimes, the stock value may drop drastically making it impossible for the employees to receive compensation. The option may also result to accounting burdens because it may raise costs past the financial ability of the company. With these problems in consideration, companies have taken up the knockout barrier option.
Knock out barrier option is a better strategy as it minimizes the initial expenses for the company. The difference is that the employees lose the compensation if the share value of the corporation falls below a specific amount. The option also falls within a certain time frame within which the value should not drop significantly over some time, say one week. The result of many knockout agreements is that there is a lower executive compensation, which shows the company’s value accurately.
However, the knockout options do not solve all the problems. Instead, they take out of the problems that would have been brought by stock-based compensation. Companies may gain a lot from this alternative.
One of the most renowned figures that offer advice to compensation committees, corporations, CEOs and teams is Mr. Jeremy L. Goldstein. He works in a boutique law firm- Jeremy L. Goldstein & Associates LLC. He has been involved in many of the largest business deals with big names such as the Phillips Petroleum Company and Conoco Inc., Duke Energies and Progress Energy, Verizon Wireless and ALLTEL Corporation, Bank of America Corporation and FleetBoston Financial Corp, and the acquisition of Goodrich by United Technologies.
Before starting his own law firm, Jeremy Goldstein was working as a partner of the Wachtell, Lipton, Rosen and Katz law firm. Currently, he is the chair of Mergers and Acquisition Subcommittee of the Executive Compensation Committee of the American Bar Association Business Section. Goldstein also reaches out to a large audience through his talks and writing. He teaches about executive compensation and corporate governance. He has been acknowledged as a top writer in the country by Chambers USA Guide to America’s Leading Lawyers for Business and The Legal 500. Jeremy Goldstein studied at the New York University of Law and has acquired a lot of experience throughout the years.
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