Every year, major corporations have to decide how they are going to reward their employees for their hard work. Some companies choose to give incentive payments based on merit, but the majority of companies go with a performance-based bonus for all employees. This means that, if the company does well and meets its targets, employees will get bonuses. While generally accepted for decades, this type of bonus has recently come under fire, and it has been up to mediators and lawyers like Jeremy Goldstein to come up with a solution that works for everyone.
One of the main arguments against performance-based incentives is that, due to recent scandals, executives seem to have too much power to make these metrics different from what they ought to be. Consider an executive that wants to increase their bonus for the quarter. All they have to do is push a few capital projects into the next year after they retire. The executive will get their bonus, but shareholders and other employees will be hurt when all of these expenses come through the income statement all at once instead of spread out over a period of time.
Not only do executives have a lot of power to change the metrics, but these metrics are all based on short-term goals and are focused on the past. Employees only have to work hard for one quarter or year to get their bonus. While this is good for the employee, it does not bode well for the overall value to the shareholder or longevity of the corporation.
Luckily, companies debating this have Jeremy Goldstein to help sort these issues out. Goldstein suggested that corporations make sure their executives are held accountable for their actions to keep them from gaining too much power. He also suggested that companies start to factor in future-based metrics instead of just short-term goals to determine what incentive payments really should be.
Jeremy Goldstein and his company, Jeremy L. Goldstein & Associates, have been working with companies and their employees for years. Due to their successes, this firm has become one of the best known in New York for their compensation and corporate governance practice. In fact, Jeremy Goldstein is even a confidant and advisor for several Fortune 500 executives and compensation committees, and he is even the Chair of the Executive Compensation Committee’s M&A Subcommittee for the American Bar Association. Goldstein will continue to work hard for his clients, and because of him, both employees and companies will have a long future of getting the pay they deserve.
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