If you have ever wondered if your company’s compensation plan is treating you fairly, then you are not alone. On the other side, the company and shareholders are probably wondering if they are being treated fairly by the incentives they are paying out as well. Sometimes, these two sides come to a head, and mediation and counseling must take place to make sure the right decision is reached to benefit everyone. This is where Jeremy Goldstein comes in.
Recently, Goldstein has been working with companies and employees to talk about the performance-based bonuses that several established companies use to incentivize their employees. With these programs, certain metrics are measured up against actual metrics at the end of a period to determine if employees and executives get a bonus. These metrics, such as EPS, gross margin, or net income, determine how the company did in the prior year. Now, however, many people are challenging if those are the right metrics to be using to determine bonuses.
First of all, the opponents argue, executives have way to much say in what these metrics ultimately are. For example, if a CEO knows that he will have to purchase a new plant in the next few years, but he will be retiring this year, he will probably hold off even though it is not in the best interest of the company. This CEO would rather defer the expense and take a larger bonus (since now net income will be higher) and let his successor take the hit. This can cause issues for shareholders and employees. Not only that, but these metrics are all looking at past performance and give little to no indication if the employees actually contributed to the long-term well-being of the company.
Jeremy Goldstein decided to split this decision down the middle and give both sides a little of what they wanted. He said that companies should have much more scrutiny and hold their CEOs and CFOs accountable for their actions. Companies should also implement forecast objectives and other forward-looking measures in their incentives.
Jeremy Goldstein started Jeremy L. Goldstein & Associates to help businesses with compensation and corporate governance issues. Since he started practicing law after graduating with his J.D. from New York University, Goldstein has acted as a counselor and advisor in countless disputes between companies, both large and small, and their employees. With Goldstein at the helm, everyone can get what they want. Learn more: https://www.linkedin.com/in/jeremy-goldstein-26aa1b4