When compensation battles get heated, and management, employees, and owners cannot come to a mutually beneficial decision, they call in the lawyers to help even things out. These lawyers are well-versed in compensation law and know all about how companies give bonuses to their employees. One of the best in the game at this type of law is Jeremy Goldstein of New York. Goldstein has helped work on several cases regarding compensation law, and his firm, Jeremy L. Goldstein & Associates, focuses mainly on companies going through large transitions, mergers, and acquisitions. The question he has to answer is the same in all instances, however, and he must determine the best plan for everyone. More recently, Goldstein has been called in to determine if the performance-based pay is the best way to go for large companies. Learn more: https://lawyers.justia.com/lawyer/jeremy-goldstein-1275422
Performance-based pay is an incentive plan in which employees are given a bonus based on whether or not the company meets certain results metrics. This could be earnings per share (EPS), net income, or earnings before interest, tax, depreciation, and amortization (EBITDA). All of these plans help give employees a sense that they are able to change how much their bonus is going to be by working smarter and harder to achieve these metrics. Plans like this help to increase morale and efficiency, and many times companies with plans like this perform better than other companies. However, are these companies sacrificing their long-term goals to gain short-term profits?
Opponents of the performance-based payment strategy argue that the whole plan is backward looking. No part of the incentive plan takes into account the future success of the company, it only focuses on what the profits were in the past quarter or year. This could mean that employees do not care about the future success of the company and are only focusing on the here and now. Executives are also able to have a large effect on these bonuses since they are the ones that can decide whether or not to increase or decrease spending. Some people worry that they will try to push off expenditures that are direly needed by the company to line their pockets with extra bonus money.
Jeremy Goldstein has suggested a compromise. He has determined that keeping pay based on performance is important, but that companies should also add forward-looking measures to their plans as well to ensure the long-term viability of the company. He also suggested that executive compensation committees should better scrutinize their executives and make sure their decisions make sense for the good of the company. In this way, Jeremy Goldstein has again solidified his success in the field of compensation and corporate governance law.