In house conusel's have better chances to receive stock options as part of compensation package
Most law firms avoid posting jobs on Indeed or LinkedIn due to high costs. Instead, they publish them on their own websites, bar association pages, and niche legal boards. LawCrossing finds these hidden jobs, giving you access to exclusive opportunities. Sign up now!
This leads us to the second question. Do only publicly traded companies offer stock options? Well, public companies certainly offer them, but they are not the only ones to do so. Small, privately held companies also offer stock options; the gain materializes when large companies buy them out or when they go public.
So, what exactly is a stock option? In the simplest form, it gives an employee the right to buy non-transferable shares of the company at a predetermined price, called the strike or the grant price, for a fixed period. This price can be the market price or a lower price. In the case of a privately held company, it is a price fixed at the internal value of the share and agreed upon by the company's board of directors through a vote. The employee can hold on to these shares and exercise them after a fixed period at the prevailing market rates. For a company that is performing well, this market rate would be higher. The difference between the grant price and the exercise price, called the spread, represents the profit for an employee.
The wild growth of some companies in the last decade led to windfall profits in stock options. In the late 1990s, there were cases in which in-house attorneys exercised stock options worth billions of dollars. Such meteoric gains were, however, few and far between. Does this mean that the era of stock options is over? Certainly not. After dizzying heights, stock prices have steadied and are now closer to their fair value. In the long run, stocks still offer a better rate of return compared to other investments (such as bonds). This sentiment is reflected in a rise in stock prices in the long term, so that when one exercises one's stock option, one can make a nice sum of money. The Altman Weil study found that values of stock options had fallen sharply two years back, but have again jumped back to high levels. In 2005, option values at the Chief Legal Officer level had leapt 43.6% to $888,600 (median), and option values at Division General Counsel level were up 14.5% to $284,400.
Therefore, we can conclude that stock options, if chosen wisely, can yield substantial profits above and beyond salary. The trick lies in choosing the right company—a difficult task!
Gain an advantage in your legal job search. LawCrossing uncovers hidden positions that firms post on their own websites and industry-specific job boards—jobs that never appear on Indeed or LinkedIn. Don't miss out. Sign up now!
What do you think about this article? Rate it using the stars above and let us know what you think in the comments below.
Upload Your Resume
Upload your resume now to receive jobs targeted to your background and future career goals. 90% of members who found a job through LawCrossing posted their resume.
