Goldstein and Associates discuss Short-Termism, Performance Goals and Executive Compensation

As the struggle for corporate control between advocates for long-term, sustainable economic growth and promoters of short-term financial performance rages on, we thought it made sense to highlight the point at which this battle manifests itself most frequently in discussions of executive pay: the selection of performance goals in incentive compensation programs. Specifically, we wanted to call attention to the brewing debate over the use of earnings per share and similar goals (EPS) in performance-based pay programs.

For many good reasons, EPS is among the most common financial performance metrics used by public companies in their incentive compensation programs. First, … Read more

Goldstein and Associates explain the “Knockout” Option: A New Form of Stock Option

The popularity of stock options as a compensatory tool has been waning at public companies for years. While there have been a number of factors that have contributed to their decline over the past decade or so, three chief concerns about compensatory options have been: (1) the accounting expense associated with stock options often exceeds their perceived value from the perspective of employees, (2) if a company’s stock price falls dramatically and the options have little chance of being in-the-money, the company must still recognize an expense and still incur the overhang of options with no way of getting rid … Read more