One of the biggest sticking points in business involves company compensation of its rank and file employees. Shareholders want to keep the cost of employees down. However, good talent does not come cheap and the best employees want some sort of incentive for their performance. Now, one compensation expert has created what may be the perfect compensation idea. That compensation expert, New York Lawyer Jeremy Goldstein, has created a compensation structure where employees, companies executive, and shareholders can all walk away happy.
First off, let us get to the major issue which dominates a company’s financials – this is known as Earnings Per Share or EPS. Most employee compensation and incentives are valued based on the EPS. If the EPS is high, then some companies will trigger a bonus or higher pay structure for their employees and executives. However, measuring compensation solely by EPS can be a double-edged sword.
Executives can make dangerous short-term decisions to drive up a company’s EPS at the expense of the companies long-term survivability. For instance, a car company can offer a bunch of “no money down, no payments for 12 months” deals to quickly clear out their auto inventory. Sales and EPS would surge for the car company in the short term. However, many of those car buyers may be unqualified borrowers and unable to make the payments on their cars, leading to an avalanche of defaults.
Jeremey Goldstein’s idea is to tie employee compensation to the long-term performance of a company’s senior executives. A CEO with a 5-year growth plan will better position a company for long-term success. The result is that employees will also have an incentive to stay with the company to execute the long-term goals of the CEO. And the shareholders can also find longterm value into holding onto the company’s shares.
Jeremy Goldstein has decades of experience as both a practicing attorney as well as a corporate compensation expert. Currently, Mr. Goldstein is the Principal Partner at Jeremy Goldstein & Associates LLC, a boutique law firm specializing in corporate compensation. Prior to opening his own firm, Mr. Goldstein worked for a number of law firms.
Educated at the New York University School of Law, Jeremy Goldstein’s portfolio of experience includes work for several major cellular companies as well as work in the energy and financial sector. In addition to his work at his legal practice, Jeremy Goldstein is also a contributing writer for the NYU Journal of Law and Business. Learn more: https://www.linkedin.com/in/jeremy-goldstein-26aa1b4