Gerald Weiss left Wall Street for a promise CFO position in an established corporation. He received a 10-year-old version of the package with a guaranteed floor of $ 12 million, and unlimited growth. To ensure the entire package will cost at least $ 12 million after 10 years, Gerald negotiated special provision, which allowed him to "gross-up" his options doubled in the last ten years. If the share price declined significantly, Gerald will presented with additional options (for-money) to all the Black-Scholes value of his package back up to $ 12 million. Due to the company's culture of informality, the deal was reached a handshake with the CEO, in the presence of the current Chief Financial Officer and Vice President of Human Resources but not recorded. When the stock price actually fell, and Gerald asked to overestimate their capabilities package, the company refused to bargain. Teaching Purpose:. For a discussion of the advantages and pitfalls of mega-grant option, the question of the re-evaluation of options, and the conflict between compliance with the corporate culture and the protection of the financial interests of employees "Hide
by Brian J. Hall, Carleen Madigan Source: Harvard Business School 10 pages. Publication Date: April 19, 1999. Prod. #: 899258-PDF-ENG
Related Case Solutions & Analyses:
Project Vishwamitra at T.P. Engineering Corporation
The Huffington Post
NASCAR: Every Second Counts – Helping Win from the Pits
Overcoming Your Time Zone Challenges
Stepping Out of the Confines of Finance
Health development corporation
We Have a Terrible Tragedy Here (F)
When a Pandemic Hits: Treading H2O and the Possible Pox (B)
Crafting And Executing An Offshore IT Sourcing Strategy: GlobShop’s Experience
A New Team Face
