Over the years, many large corporations have started no longer offering employees stock options as incentives included in their benefits packages. Many companies stopped offering the options strictly to save money. However there are a few other reasons that have convinced employers to stop offering stock options. Learn more: https://www.facebook.com/pages/Jeremy-L-Goldstein-Associates-LLC/411406302333227
- Employees lose the chance to sell their options if the stock’s value severely drops. Despite that, the company still has to file all related expenses, while shareholders also may face option overhang.
- Employees have become less comfortable with this type of employee benefit, because they know that the economy can cause changes in the stock market, causing options to lose their value. When their options become worthless, employees options are akin to playing free money promotions in the casino, as opposed to earning real cash.
- The accountants prefer not having to track options. The financial costs related to these options may outweigh any potential benefits. Employees often say they would rather receive better salaries. If companies eliminate options from their benefits package, then they have the money to give pay raises.
Despite all the negatives, some companies would still rather offer stock options over increased wages. By offering stock options, each employees receives the same compensation. Stock options have become easier for employees to understand. Also stock options earnings rise, only when the value of the company’s shares increase. Because of that, employees will likely work harder to keep their company successful and find creative ways to make sure their stock options increase in value.
Jeeremy Goldstein is a corporate lawyer with more than 15 years experience. He specializes in corporate governance and executive pay. He is the co-founder of Jeremy L. Goldstein and Associates. He is based in New York City, New York. Jeremy Goldstein has been involved in many of the top corporate transactions.