Many related parties discuss factors involved with the Earnings per Share (EPS) incentive-based program that has been religiously used throughout corporations for years. Is it what a corporation needs? As many claim that it lacks long-term merit and only provides short-term value, Attorney at Law, Jeremy Goldstein thinks otherwise. He feels as though corporations can use the EPS program to provide long-term benefits. Is he right? He provides his insight.
To kick things off, who is Jeremy Goldstein? Well, he definitely has some merit to his profile. He graduated New York University School of Law with the highest education in the legal profession, the Juris Doctorate degree. He would later go on to start his own practice in New York titled, “Jeremy L. Goldstein and Associates, LLC“. He is one of the top selections for legal counsel in the Legal 500 and the Chambers USA Guide to America’s Leading Lawyers for Business. He writes for many journals, offering counseling and his opinions on various legal matters. He is donator to a highly valuable organization that helps people with mental illnesses, called, “Fountain House”.
As far as EPS is concerned, it is a big influencer in stock prices for the benefits and disadvantages of shareholders. A corporation’s profits are in proportion to whether shareholders buy or sell shares and in addition for many corporations, profits serves as an incentive for employees who performs at increasing levels. The EPS program has proven to be a success in companies and getting rid of it may do more harm than good. Due to the competitiveness of shares and trading, unfair practices can take root and cause disadvantages in the process.
CEOs and executives of companies in the past have been subjects of dishonest practices with their company’s shares. Skewing the metrics of EPS can definitely be a factor amongst those with corporate power as monetary advantages by any means are sometimes more important to professionals than company integrity. If a dishonest action can be a solution to drive share sales, some CEOs and executives would be in agreeance for participating in such related matter in a heartbeat.
Also in regards to EPS, it is claimed to be a short-term profitability program. Expert, Larry Fink suggests that if you’re looking to invest in the long term sustainability in a company, EPS isn’t the way to go. He suggests that companies should look the other way of EPS and focus more on long-term goals and find ways to strengthen their share values.
What Jeremy Goldstein suggests is that those who are for and those who are against EPS should come to a compromise. Keep the EPS program, but make critical adjustments that are more geared towards long-term goals. The way of the matter is to hold CEOs and executives responsible for their actions. To ensure that pay per performances align with long-term goals of a company will create sustainable growth and measure share growth throughout the company’s journey towards its long-term goals. Learn more: https://about.me/jeremy.goldstein