Jeremy Goldstein on Stock Options Strategies

Jeremy Goldstein has been in the business of advising corporates on legal, financial matters for a long time now. Jeremy Goldstein acknowledges that there are two sides of the coin as far as stock options are concerned. There are both advantages and disadvantages of the stock options to both the firm and the employee. In recent times the number of companies that are rolling out stock options has been going down. What are the reasons for this happening?


According to Jeremy Goldstein, there are three main reasons why companies are no longer looking at the stock options as a viable way of doing business. One, sometimes stock value drops to levels that bar the employees from executing their stock options. In such a scenario the additional cost falls on the company since they have to report the expenses. The results are what is called overhang. Secondly, there is the issue of employees dropping the stock options and preferring to be compensated with a salary. Thirdly, the stock options usually create a complicated scenario for both the company and the employees, not sure how to apply them.


On the other side, there are the advantages associated with the stock options. One, the stock options offer an opportunity for the employees in a firm to improve their productivity. The reason for this is that both the firm and employees are direct beneficiaries of a better stock value. If the share value of a company improves, it means that the firm will make more profit and the employees will also enjoy a good stock option value. In that case, it is a win-win scenario. It is an incentive for the workers to increase their productivity.


According to Jeremy Goldstein, the only way out of this stock options scenario is to adopt the “Knockout Option.” This is the option that will balance both ends of the stock options.


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