Jeremy Goldstein Recommends Compromise Over Cancellation

Jeremy Goldstein is an attorney that practices in New York City. He is the Founder of Jeremy L. Goldstein and Associates, a growing boutique firm, and he was a partner with Wachtell, Lipton, Rosen, & Katz for a number of years. Mr. Goldstein is an expert concerning corporate governance and executive compensation, having played an integral role in a number of major corporate transactions, including the acquisition of Goodrich by United Technologies Corporation, as well as deals between The Dow Chemical Company and Rohm and Haas Company. His undergraduate studies were completed at Cornell University, where he graduated cum laude, and he would peruse and attain his Doctor of Jurisprudence degree from New York University School of Law. He is currently a member of the American Bar Association Business Section where his the Chair of a subcommittee of the Executive Compensation Committee. In recent years, there has been an ongoing debate regarding the implementation of pay per performance incentives, particularly Earnings per Share. He recently weighed in on the debate and offered his opinion on a solution for the continuation of pay per performance incentives.

Generally viewed as a positive for corporations choosing to implement employee incentives, Earnings per Share programs are a major force in driving up the price of a company’s stock, as well as improving employee performance an morale. Recent studies have found a direct correlation between the overall success of a company, and Earnings per Share when implemented in the pay structure. On the surface, it seems that Earnings per Share and other pay per performance incentives would be advantageous for any company looking to grow, but because the competitive climate of the stock market, CEOs and executives unopposed to unethical practices may choose to leverage these incentives for their own benefit. This is one of the major sticking points of those opposed to pay-per-performance incentives, as well as the fact that it gives CEOs an enormous amount of power, thus taking away the collective control of the company. In order to combat this, Jeremy Goldstein recommends that companies personally hold CEOs and other executives responsible for their actions. Because Earnings per Share incentives directly relate to a positive work environment, they shouldn’t be canceled, but instead compromised upon. Companies should create a protocol that would allow them to ensure that the long-term goals are in accordance with the metrics tied to pay per performance. By doing so, the chances for long-term success that is both repeatable and sustainable is greatly increased.

 

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