It’s paramount for an organization or a business to operate in a sustainable economic environment for it to succeed. There are many factors that an institution should address to create such an environment. Lately, it has become harder to address the factors. Jeremy Goldstein has been in the entrepreneurial industry for years, and as a result, he has had the front row seat to the repercussions arising due to the situations. The situations lead to a battleground where incentives for workers and long-term investors almost stand to lose. Jeremy Goldstein has worked with large corporations like the Bank of America. His experience enables him to shed light on how to best use Earnings per Share (EPS) and other incentive-based programs. Additionally, Jeremy chips in on the debate of their use in performance-based pay programs.
EPS stand to benefit the employee, and it’s one of the major influencers of the stock price. As a result, it’s an essential aspect for shareholders. More often than not, it influences the shareholders to trade (buy or sell). On the other hand, it benefits the employee as it provides an incentive for an organization to payout per employee. Including EPS in the overall pay structure at a firm has proven to generate profits. Even with the advantage EPS holds, the competitive nature of shares may lead to entities leveraging EPS for their selfish gains.
Disadvantages have been pointed out by opponents. They say that EPS leads to favoritism. Additionally, rather than providing collective control, the metrics leave all the power with CEOs and executives. Therefore, the executives in the organization have the capability of skewing results to influence the sale of shares. Also, they argue that the metrics benefit those interested in short-term profitability. As a result, they provide no sustainability for the business in the long run. The performance-based pay programs are often unreliable. Jeremy Goldstein recommends for institutions to hold CEOs and executives accountable for their actions rather than doing away with pay per performance.
Jeremy Goldstein is the founder and partner of Jeremy L. Goldstein & Associates LLC. The firm dedicates its facilities to advising a wide range of customers including CEOs, management teams, and compensation committees among many others. Before starting the law firm, Jeremy Goldstein worked at Wachtell, Lipton, Rosen & Katz law firm as a partner.
Jeremy Goldstein is an author and a speaker with a specialty in corporate governance and executive compensation. He is a member of several legal bodies. Additionally, he is an active philanthropist. He contributes to Fountain House, an institution that offers aid to people with mental illnesses.
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