Nowadays, several corporations have stopped providing stock options to their employees. Many times this is done in order to save money. But many times, the reasons can be more complex. There are some major problems that would frequently persuade these companies to curtail all such benefits.
Jeremy Goldstein feels that one such reason can be that the stock value of that company has dropped significantly. Due to this, the employees may not be able to exercise their options. Still, the businesses would have to notify all their associated expenses. In addition, the stockholders would be facing the option overhang also.
Jeremy Goldstein further stated that many employees today are quite wary of such kind of a compensation method. They are well aware that economic downturns tend to make the options worthless. Hence such benefits appear more like casino tokens rather than cash.
Such options will result in accounting burdens too. There would be relevant costs associated with them. Jeremy Goldstein clarifies that this can eclipse the financial advantages which are due from all these derivatives. Even the staff members may not consider these as valuable benefits as the employer can pay higher salaries otherwise in case the stock options were eliminated.
Still, Jeremy Goldstein feels that such kind of compensation will still be preferred over additional wages, or equities or even a higher insurance coverage. This is because staff members are able to understand stock options in a much easier and faster way. This is able to provide something that is of equivalent value and made available to all employees.
Also, options are able to boost personal earnings once the share value of a corporation rises. This way, people are able to prioritize the success of any company. It makes the staff work harder and develops innovative services too.
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