Jeremy Goldstein Explains How Knockout Clauses Protect Employees

Jeremy Goldstein is a Harvard graduate who is a partner at Jeremy L. Goldstein and Associates. Jeremy Goldstein is a contributor to several legal publications such as The Legal 500 and Chambers USA Guide. Before becoming a partner at his current firm he was a partner Wachtell, Lipton, Rosen, and Katz.


Jeremy Goldstein’s current work involves specialty consulting with a focus on corporate compensation. This is a unique legal field that helps companies give their employees more compensation while reducing the overall cost to the company. Jeremy Goldstein is able to help companies navigate a process that is heavily regulated, little understood, and requires dependable knowledge of the stock market.


Jeremy Goldstein recently published an article recommending that companies use a specific clause when giving out stock options. Stock options are the right to purchase a stock at a given price. This means that an employee can cash it out at either the current rate, or they can wait to cash out the option when the stock price is higher. The problem with stock options is that it can result in employees selling off their stocks when the price gets dangerously low. This can result in a company having to deal with a sudden cost when they are in a dangerous financial situation.


Jeremy Goldstein recommends that companies put a knockout clause in their options. This option automatically cashes out an option when the price falls to a certain level. This benefits the employee by causing them to not lose too much of their option’s original value. It also helps a company to avoid the sudden burden of many employees cashing out their options at once. In addition, the existence of a knockout clause will automatically reduce a company’s financial responsibilities. This makes the company more resilient and will help to prevent the lower of stock price in the first place.


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