According to Jeremy Goldstein Knockout options are the best solution for current corporation stock option woes. A knockout option is a clause that renders employee stock options null and void should their value plummet past a certain mark. By doing this the corporation is protected from overhang, burdening taxes, and ineffectual costs. Knockout options also provide incentive for employees to exercise the options, familiarize themselves with the market, and take more value in their own work.
Due to a number of disadvantages, many companies are opting out of stock options for their employees. Although offering stock is good for the company in many ways, it can also be damaging. There is the constant threat of overhang, as many employees do not do anything with their options. Many see it as a proper form of gambling and put no value in the options. Either way if the stock drops low, many employees who still hold onto their stock cause overhang, which then affects other investors. According to Jeremy Goldstein such problems can be avoided by using Knockout options to render such stock null if the value drops.
Jeremy Goldstein is a corporate lawyer with year of experience with business law. He owns his own law firm, Jeremy L. Goldstein & Associates LLC, and specializes in compensation and management matters for corporations. Goldstein has also been a part of numerous major business transactions. Over the past years he has participated in the Verizon merger with ALLTELL, Jeremy Goldstein has been a part of many historic business transactions in his time. Notable among them is the United Technologies acquisition of Goodrich, and the Verizon merger with ALLTELL, Duke Energy with Process Energy, Goldman Sachs and Kinder Morgan, as well as United Technologies acquisition of Goodrich.
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