Jeremy Goldstein Advice About Knockout Options

Many business corporations have of late been eliminating the advantage they give to their employees to buy their stock at discounted prices, commonly known as stock options. The main reason being floated around by these corporations and is that they are looking into ways of saving more money. However, is this really the reason? Let us look at some of the reasons explained by Jeremy Goldstein, that normally not known to people which actually contribute to this measure being taken.



At the top of the list is to avoid the risk of option overhanging. This happens when the stock value drops by huge margin making it hard for employees to buy the stock at their discounted price. Second, employees too are starting to reconsider the value that options add to their net worth. Employees understand that in case of a financial crisis in their corporations their options will lose value. Therefore it is not a sure investment. It can still backfire on you. Finally, some employees consider this as a financial burden. Some feel it is better to have the full salary without deductions for options being made.



Even as this happens there are advantages that are related to the stock options. One, stock options offers are of equivalent value to all employees. This means no employee is disadvantaged in the plan. Secondly, stock options have the capability of inflating employees’ earnings. Being aware that the more financial success a company encounters translate to more earnings, employees will be motivated to push the business into further growth. Thirdly, some laws governing the conduct of business organizations stipulate that they should offer options instead of shares. Failure do this will result in a bigger tax for the affected corporation. Therefore for any company to enjoy these benefits it must adopt a strategy that ensures a balance between the advantages and disadvantages.



One strategy that strikes this balance is the “knockout” strategy. This strategy works by deeming the options null and void if the share value falls below a certain amount. With knockout options, corporations can avoid overhanging non-employee investors. This eliminates fear from stockholders that their share ownership will be reduced.



Jeremy Goldstein


Jeremy Goldstein is managing partner with Jeremy L. Goldstein & Associates LLC. It is based in New York. His law firm advises business organizations on matters of compensation corporate governance. Jeremy Goldstein main area of focus is on matters of transformative corporate issues.


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Karl Heideck: Writing About Corporate Legal Issues

Karl Heideck is an attorney who loves to write legal articles on his blog. One of the latest articles that he wrote concerns the newest law that has been enacted in the city of Philadelphia. The city council agreed to pass the law which will be known as the “Salary History Law”. The new law states that the Salary History Law should prohibit employers from asking their applicants about any information concerning their salaries from their previous companies. The law is seen to end the salary gap between men and women who are working within Philadelphia, and the proponents of the law believes that it will benefit the applicants and their previous companies to contain these private information. However, a growing opposition is calling out that the new law should be stopped. The Chamber of Commerce for Greater Philadelphia wanted to halt the implementation of the said law because they believe that the law is unconstitutional, and laws similar to the Salary History Law will result in issues that are critical to the growth of businesses in the city. They also believe that with the enactment of this new law, businesses could receive a fatal blow, forcing them to close down.

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The Chamber of Commerce for Greater Philadelphia filed a lawsuit against the city of Philadelphia, but it turned out unsuccessful as the court sided with the city regarding the implementation of this new law. The court decided that the law is constitutional, and that it should be kept implemented. They added that the new law, in any way, could not have any negative impact to the growth of business in the city.

The article written by Karl Heideck received favorable reviews from people who have seen and read it. It was also shared to other websites, and has been a topic of debate for some. His passion for writing articles about laws stems from his willingness to help the people gain more legal knowledge. He is also offering his services to those who need legal assistance. Karl Heideck, aside from his stint as a blogger, has also worked with corporations to be their adviser and lawyer, and because of his brilliance, he became one of the most sought after lawyers in the country. Karl Heideck is known to deal with several issues including corporate laws, commercial litigations, product liabilities, and employee proceedings.

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