Knockout Options are the Key Says Jeremy Goldstein

Practices that were once common amongst major corporations across the world, such as offering stock options to employees, have dwindled in terms of usage due to accounting costs and a multitude of additional issues, changing the landscape of employment throughout the corporate world. When it comes to stock options, there are usually several prominent reasons that companies have discontinued the practice. Due to overall volatility of the stock market, stock values may fluctuate considerably, and in the case that the value drops significantly, stockholders may face issues such as option overhang.


The best solution to combating the issues associated with offering stock options could be for employers to include a knockout option. If a knockout option is included, once a stock drops below a certain price, the option is rendered obsolete, saving the company from increased accounting costs, as well as protecting stockholders that are not employed by the company from option overhang. Including a knockout clause will also create decreased compensation figures for executives, while also offering a more accurate reflection of the company’s earnings.


An expert on the law concerning corporate governance and executive compensation, the founder of Jeremy L. Goldstein and Associates, LLC, Jeremy Goldstein, has been a major factor in some of the most important world’s most important corporate transactions to occur over the last decade. His boutique law firm provides sound financial advice to CEO’s, compensation committees, and management teams, during times in which sensitive situations arise, as well as during significant corporate events. Prior to founding Jeremy L. Goldstein and Associates, LLC, Mr. Goldstein was a partner with Wachtell, Lipton, Rosen, and Katz. Jeremy L. Goldstein is a graduate of Cornell University, where he received his B.A. cum laude, and he later attended New York University School of Law. He also received his M.S. from the University of Chicago. Throughout his career, Jeremy Goldstein has received a number of awards and honors, including being recognized as one of the top executive compensation lawyers in the United States by The Legal 500, as well as Chambers USA Guide to America’s Leading Lawyers for Business. He is a frequent contributor of articles regarding executive compensation and corporate governance on a multitude of online platforms, and he is a member of the Professional Advisory Board of the NYU Journal of Law and Business, as well as being an active board member at Fountain House; a charity that focuses on recovery from mental illness.


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