There is more than one way to compensate savvy and intelligent employees who have more than just the desire to draw a paycheck from the work they perform for a company. For example, an employer may offer a benefits package, a production bonus, retirement plan, or some other way to compensate employees. One of these other methods of compensation include offering workers stock within a business. This offers presents its own set of challenges, opportunities and rewards for all parties involved. But with a little give and take when it comes to the common good, there are options available to help draft solutions.
The first challenge when it comes to stock is that their value might not always hold in troubling economic times. When this happens getting any type of return from value of stock can appear to be not really worth the trouble. This is due to the fact that businesses have to make quarterly reports, and the value of stock and what not may be a little complicated around tax time. There’s also the unattractive risk of option overhang, as far as stockholders are concerned.
However, there are also good reasons for applying this type of compensation. One of which is that it’s an equal opportunity, for every employee who holds stock, to get more out of being part of the team. Another good reason for offering stocks is because they hold more worth as a company does better. This is a good reason to make sure employees give their all, while they’re in service to a business as their employer.
Another advantage to the offering stock to employees is the accounting simplicity it affords as a reward. These are much easier to account for when it comes to dealing with the Internal Revenue Service, compared to other things like equities. It’s a great way to compensate anyone who’s on the roster from the CEO on down to the mailroom clerk.
As a side note, options are much easier tax-wise than providing shares. This is where the knockout option comes into play where it effects stocks. Basically, what it means is that if a company’s stock value drops below a certain amount, within a given time, the options knock out for share holders. It’s a way of offering extra compensation for with those who care that does not put a company’s business in jeopardy.
This is the type of advice that Jeremy Goldstein is used to giving as a business lawyer. Some of the businesses that his advice has yielded extreme returns for include Verizon, Chevron, and AT&T. These days he sits on different boards and is proud to be a figurehead at Fountain House.
Visit http://jlgassociates.com/ to learn more.