Earnings Per Share: A Jeremy Goldstein’s Perspective

With J.D from New York University School of Law; Master of Arts from the University of Chicago and a B.A cum laude with distinction from Cornell University, Jeremy Goldstein is a very educated person. His career path saw him become a partner at Wachtell, Lipton, Rosen and Katz law firm before founding his boutique law firm, Jeremy L. Goldstein and Associates LLC.


As a partner of the firm, he offers advisory services on corporate management matters and executive pay to compensatory teams, management committees, CEOs and corporations. Having addressed broadly corporate management and executive compensatory issues, Mr. Goldstein has become listed as the best executive compensatory lawyer in the ‘Legal 500’ and ‘Chambers USA Guide to America’s Leading Lawyer’s for Business.’


Working with reputable corporations such as Duke and Verizon validates Jeremy Goldstein as an authority in advising on how to tackle the issue of Earnings per Share and other incentive programs while offering his views on the debates going on about how pay-on-performance programs get used. He says long-term investors and employees will have no chance should sustainable economic growth in corporations not be created. Proponents of the EPS system agree it is positive based on how employee incentives are tackled: It influences stock price while helping shareholders in determining whether to buy or sell. Most importantly, the incentive determines whether to increase the amount paid out per employee.


The downside of EPS though, according to critics of Jeremy’s compensatory insight, is that, since trading and shares can be competitive, corporates can use the EPS system to an unfair advantage. EPS opponents believe that instead of metrics providing joint control, CEOs and executives may skew results due to having too much power in determining if or not, based on EPS, metrics get attained. Skewing of metric results by company executives to push for sale of shares could prove misleading to shareholders. Others argue, EPS metrics neither provides sustainable cushioning to the growth of a company in the long-term, hence can be a discouragement to investors seeking to reinvest their money.


Opponents’ concerns over EPS backing stock exchange gets further fuelled by the fact that compensatory programs based on performance are radical and continually changing. Instead of focusing on short-term goals like performance-based compensation backed by EPS, Larry Fink challenges Goldstein; corporate companies should refocus on long-term investments targets to strengthen the value of shares.


Jeremy Goldstein opines that sustainable growth and long-term reinvestment based on EPS will only be achieved if executives are held accountable for their actions. In suggesting a middle-ground for proponents and opponents of EPS, he strongly holds that performance-based compensation is an incentive that still makes companies successful, and should not get rubbished.


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