Many companies want to have the best talent to drive higher profit for their company. For publicly traded companies, however, compensation costs are sometimes seen as an anchor on share prices. New York lawyer and compensation expert, Jeremy Goldstein, offers a unique comprise which benefits the company, the employees as well as the shareholders.
One of the metrics used to measure employee compensation is known as earnings per share or EPS. In fact, employees, as well as CEO compensation, can be tied to the performance of the EPS. However, this can be a double-edged sword, as Jeremy Goldstein pointed out in a recent article.
Those who are against EPS as a compensation metric argue that the CEO and high ranking corporate executives have too much control over the earnings number. This can lead to the EPS being manipulated, created an air of mistrust between the shareholder and the company. Jeremy Goldstein believes that a solution, to the EPS controversy, lies in a compromise between the CEO and the shareholders.
Instead of tying compensation to short-term EPS numbers, the compensation of a CEO should be tied to long-term company goals. Since long-term goals cannot be easily manipulated by any party, the compensation structure could be seen as fair and honest to everyone involved.
By focusing on long-term growth, companies can allow their employees to focus on projects that will add sustainable growth to the business. Also, the company will be more likely to have a stable roster of senior executives who will want to stay onboard to realize their long-term compensation goals. Finally, by focusing on long-term goals, the company will be better positioned to remain competitive in shifting market environments.
Jeremy Goldstein is a practicing attorney who has been working in the New York City area for over a decade. Today Mr. Goldstein is the principal partner at Jeremy L. Goldstein and Associates, LLC. The boutique legal firm specializes in employee and executive compensation as well as corporate governance.
Jeremy Goldstein was educated at Cornell University where he received a Bachelors of Art in History. Mr. Goldstein continued his education at the University of Chicago where he received his Masters of Arts in Art History. Later, Mr. Goldstein received his Juris Doctor of Law at the New York University, School of Law.
For more information, connect with Jeremy Goldstein on LinkedIn.