There is always a delicate balancing act to be done when it comes to employee incentives. On the one hand, such programs help to encourage work ethic, by rewarding those who show more of it. By giving an employee a certain amount of stock in the company, that employee becomes more like a business partner. As a result, productivity will often go up. However, some others say that this kind of incentive system is very prone to be manipulated in a way that can be disadvantageous to the company. This creates a complex and multi-faceted debate whenever a decision has to be made on this subject.
New York City attorney Jeremy Goldstein weighs in on this matter with a lot of experience behind him. He has worked for some of the world’s largest corporations, including Bank of America, Verizon, and Goldman-Sachs. Mr. Jeremy Goldstein has a J.D. from New York University School of Law, an M.S. from the University of Chicago, and a B.A. cum laude with distinction from Cornell University. Before he went on to form his own law firm, he was a partner at Wachtell, Lipton, Rosen & Katz. He also has the honor of being a subcommittee chair of the American Bar Association. When it comes to matters of corporate law, you could not ask for a better authority, as he has been involved in a large number of high-dollar corporate transactions.
Employee incentives most often take the form of Earnings Per Share, or EPS, programs. There are others, but for our purposes here, we will focus mainly on EPS incentives. Those who advocate for the use of these programs point out the obvious increase in employee motivation, and the resultant improvements in productivity. They also point out that EPS is one of the biggest influencers on stock price. Often, it might be the main thing that makes a shareholder buy or sell their stock.
Those who oppose these programs say that they can work against a company’s bottom line in various ways. they say that, when these kinds of programs are in place, it is far too easy for CEO’s to manipulate EPS data in order to give shareholders a distorted view of the company’s performance. They also say that favoritism can lead to a situation in which not all employees profit equally from the program. Perhaps their main argument is that they want to focus on long-term investments rather than short-term investments.
Jeremy Goldstein recommends a middle-ground approach. Recognizing that EPS investment does provide certain benefits, he recommends keeping such programs in place. However, he also recommends tighter control of these programs in order to make sure that those at the top cannot get away with skewing the numbers or going against the goals of the company as a whole. This, he says, provides a platform for long-term sustainable growth without sacrificing the incentives that are also necessary to maintain productivity. Learn more: http://www.chambersandpartners.com/USA/person/485609/jeremy-goldstein