Premium Essay

Sally Jameson Case

In: Business and Management

Submitted By rodrigopvt
Words 1411
Pages 6
9-293-053
REV: AUGUST 19, 2003

PETER TUFANO

Sally Jameson: Valuing Stock Options in a
Compensation Package
Sally Jameson, a second-year MBA student at Harvard Business School, was thrilled but confused.
It was late May 1992, graduation was approaching, and she had finally landed the job of her choice.
She had just finished an early morning telephone conversation with Bob Marks, the MBA recruiting coordinator at Telstar Communications, a large, publicly held multinational company. Mr. Marks had offered Ms. Jameson a unique position in operations at Telstar, and from the description, it sounded exactly like the job that she wanted. Since her first interview with Telstar, she had been very impressed with the company and its people. While Ms. Jameson was certain that she would accept the job, there was still one unsettled, yet crucial, matter--her compensation.
During the conversation with Marks, Jameson had asked what her compensation package would be. Marks: "Well, Sally, we are all very impressed with you and would like to offer you a starting salary of $50,000. In addition, you will also receive a signing bonus."
Jameson: "The base salary is a little below what I had expected. Is that negotiable?" Marks: "I'm afraid not. That's the same starting package all MBAs get.
However, you will receive a bonus upon accepting our offer. You can receive
$5,000 in cash, or choose stock options instead."
Jameson: "I'm not too familiar with stock options. Could you explain to me what they are?"
Marks: "Sure. Executives at Telstar have been eligible to receive stock options for years. The goal was to tie management's compensation more closely to increases in shareholder value. Although our stock has performed erratically over the last ten years, the board continues to believe that stock options are the best form of incentive compensation. Because the…...

Similar Documents

Premium Essay

Sally Jameson Case Study

...If we ignore tax considerations and assume that Sally Jameson is free to sell her stock options at any time after she joins Telstar she has several options. She can either choose to take the cash bonus, the stock options and sell it, or she can take the option and keep it until it is worth use. Let’s compare the three situations that we choose to analyse : 1- She takes the cash bonus and decide to invest it in a 5-year bond which has a anualize rate of 6.02%. So at the end she will win 5310$ (=5000*1.0602). 2- She takes the options in order to sell her stock options. Let’s assume that it is easy to find someone who want to buy the option at the value of the call option. Using the exhibit 3, the standard deviation of the Telstar common stock is 30%. S= 18.75 K= 35 r= 6.02% t= 5 σ= 30% So C= 2.9245 Assuming that she can easily and quickly find someone to buy her options, she can sell it at 3000*2.9245= 8773.5$ Then she could even invest these 8773,5$ in a 5years bond and win 8773,5*1,0602=9301,7$ 3- She keeps the options until it is worth use it and sell her shares. If she wants to earn more than she could have won by taking the cash bonus we have to find the value of the stock that would make her win more than 5301$  (X-35)*3000=5301 => X= 36,767 So when the value of the stocks is greater than 36,767, it will be worth using the option and sell the shares after. Sally Jameson will win more than 5301. If she want to earn...

Words: 1203 - Pages: 5

Premium Essay

Sally and Jameson Case Study Question 1

...Question 1 If we ignore tax considerations and assume that Sally Jameson is free to sell her options at any time after she joins Telstar she has several chooses. She can either choose to take the cash bonus, either take the options and sell it, or she can take the option and keep it until it is worth use. Let’s compare the situations : 1- She takes the cash bonus and decide to invest it in a 5-year bond which rate is 6,02%. So at the end she will win 5310$ (=5000*1,0602). 2- She takes the options in order to sell it. Let’s assume that it is easy to find someone who want to buy the option at the value of the call option. Seeing the exhibit 3, the standard deviation of the Telstar common stock is 30%. S= 18,75 K= 35 r= 6,02% t= 5 σ= 30% So C= 2,9245 Assuming that she can easily and quickly find someone to buy her options, she can sell it at 3000*2,9245= 8773,5$ Then she could even invest these 8773,5$ in a 5years bond and win 8773,5*1,0602=9301,7$ 3- She keeps the options until it is worth use it and sell her shares. If she wants to earn more than she could have won by taking the cash bonus we have to find the value of the stock that would make her win more than 5301$ (X-35)*3000=5301 => X= 36,767 So when the value of the stocks is greater than 36,767, it will be worth using the option and sell the shares after. Sally Jameson will win more than 5301. If she want to earn more than she could have won by selling the options...

Words: 385 - Pages: 2

Premium Essay

Sally Jameson Option Valuing Case Study

...Sally Jameson: Valuing Stock Options in a Compensation Package By Group 10 1. If we ignore tax consideration and assume that Sally Jameson is free to sell her options at any time after she joins Telstar, which compensation package is worth more? First scenario, if Sally chooses stock options and hold until maturity date. Ignoring the taxation and other constraints, the future value of cash compensation at the end of the 5th year will be 5000 * (1 + 0.0602) ^ 5 = 6697.44. We can easily form the equation 3000 * (P – 35) = 6697.44, where P is the future stock price of Telstar, so the stock price must increase to at least 37.23 at the end of 5th year to get the same amount of the cash compensation and if the stock price where to stay below 35, Sally’ option would be worth nothing. The stock, which pays no dividend and is not expected to pay one in the foreseeable future, is trading at 18.75. It seems significant difference between the exercise price and the spot price. As shown in Exhibit 2, Telstar stock price has increased higher than $35 only once and 10-year average stock price is around 20. Therefore, the chance that the value of option is greater than the cash compensation is very rare. Second scenario, assume Sally is free to sell options at any time after her joining Telstar, she may sell her option immediately after receiving. Then we try to price the value of stock option by using Black - Scholes Model. We know that the stock is currently trading at $18.75...

Words: 1059 - Pages: 5

Premium Essay

Distortion Fields

...9-293-053 REV: AUGUST 19, 2003 PETER TUFANO Sally Jameson: Valuing Stock Options in a Compensation Package Sally Jameson, a second-year MBA student at Harvard Business School, was thrilled but confused. It was late May 1992, graduation was approaching, and she had finally landed the job of her choice. She had just finished an early morning telephone conversation with Bob Marks, the MBA recruiting coordinator at Telstar Communications, a large, publicly held multinational company. Mr. Marks had offered Ms. Jameson a unique position in operations at Telstar, and from the description, it sounded exactly like the job that she wanted. Since her first interview with Telstar, she had been very impressed with the company and its people. While Ms. Jameson was certain that she would accept the job, there was still one unsettled, yet crucial, matter--her compensation. During the conversation with Marks, Jameson had asked what her compensation package would be. Marks: "Well, Sally, we are all very impressed with you and would like to offer you a starting salary of $50,000. In addition, you will also receive a signing bonus." Jameson: "The base salary is a little below what I had expected. Is that negotiable?" Marks: "I'm afraid not. That's the same starting package all MBAs get. However, you will receive a bonus upon accepting our offer. You can receive $5,000 in cash, or choose stock options instead." Jameson: "I'm not too familiar with stock options. Could......

Words: 1531 - Pages: 7

Premium Essay

Sally Version Alternativa

...Sally Jameson: Valuing Stock Options in a Compensation Package (Abridged) Group Satie: Ai Nakajima, Chen-Wei Tang, Mithun Sridharan, Sarah Wright, Daniel de la Cuesta 23th May 2012 If we ignore tax considerations and assume that Sally Jameson is free to sell her options at any time after she joins Telstar, which compensation package is worth more? We can calculate the value of the stock options today using the Black-Scholes Model. If the value of the 3000 Sally´s stock options is greater than $5000 and she has the possibility to sell the options, then she should go for the stock options instead of the cash. To calculate the value of the stock options today we have to find the volatility of the stock. In this case we are going to calculate the “historical implied volatility”, which refers to the implied volatility observed from historical prices of the stock. We have the historical price of the stock for the last 10 years so we calculate the gains for each value compared with the previous one (P1/PO) and we convert them to the logarithmic scale (LN(P1/P0)). After that, we calculate the standard deviation of the time serie and we multiply it by SQRT(252) to get the annualized volatility. The final value for the volatility is 0.3689. Now we have all the data to calculate the current fair value of the stock options offered to Sally: Option Price P 23 Exercise price X 35 Current Stock Price S 18.75 Risk-Free Rate r 4.07% Maturity of the......

Words: 960 - Pages: 4

Premium Essay

Prescription Drug Abuse

...are having. In most cases people are not prescribed painkillers for a long duration of time due to the long term affect they have on your body. When it is time for these individuals to stop taking prescription painkillers they find themselves addicted, unable to stop taking them, and craving for more. At this point is when people become abusers of prescription painkillers, one of the most. Most prescription drugs are highly addictive making it very easy to become an addict which only proves why prescription drugs have caused such a huge problem leading up to the now worldwide epidemic. The ongoing craving for the “high” that comes from the misuse of prescription drugs is what keeps people wanting more, it is what caused the start to a worldwide epidemic. Most individual who begin to abuse these drugs are doing it to experience the pleasant feeling they give you. Approvimently 6.3 million Americans stated they are using prescription drugs for non-medical use according to Food and Drug Admin. It is commonly believed, according to a report released by the White House in 2011, that prescription drugs are less dangerous when abused than illegal drugs because they are approved by the Food and Drug Administration. (qtd. in "Substance Abuse a Serious Problem?'.") Is that why there has been a massive spike in overdoes compared to past years, because people think it is okay to take them because doctors prescribe them? Executive director of Gateway Foundation, Sally Thoren says......

Words: 1918 - Pages: 8

Premium Essay

Mr Jack Coulbeck

...prestige and social position. Utilizing the semiological theory of the sign, Baudrillard describes the world of commodities, consumers, and consumer culture. By focusing his analysis directly on sign control, commodification, and ideological legitimations of consumer capitalism, Baudrillard extends Marcuse’s (1964) “one-dimensional thesis” to a higher level. In One Dimensional Man (1964), Marcuse suggests that advanced industrial society is capable of containing social change and criticism. This process results in more effective and sometimes pleasant forms of social control and social cohesion (Marcuse 1964, p. xv). Baudrillard extends this thesis by placing it in the context of contemporary consumer culture which has been described by Jameson (1991) as “late capitalism.” Here, signs of resistance and revolt are quickly absorbed and commodified by capital. Rather than threatening the market, consumer boycotts, resistance to material acquisition, revolutionary consumers, and use of consumption for political expression rejuvenate the market (Holt 2002). What begins as a sign of defiance soon becomes a part of consumer culture rather than a criticism of it. The Culture of Sign Value Baudrillard conceives of needs and uses, not in terms of investing nature with value to form utility, but as cultural constructions. The heart of his theory is therefore the socio-cultural context. It is this context that demands conformity to the norms and values of associative groups and......

Words: 7423 - Pages: 30

Premium Essay

Books

...Paxton as… Four Nikki didn’t go home following the movie after all. She… Five There is very little chance of a high-speed pursuit on… Six Nikki stepped into the rooftop bar of the Soho House… Seven Even as she stood frozen in her hallway, Nikki’s first… Eight When Detective Heat nosed the Crown Vic out of underground… Nine Nikki Heat’s apartment building was not the Guilford. It was… Ten Nikki led him wordlessly into her bedroom and set the… Eleven Thirty minutes later, Detective Heat stepped off the Guilford’s elevator… Twelve The three detectives and Rook maintained a tense silence as… Thirteen In the precinct interrogation room, the biker, Brian Daniels, seemed… Fourteen Raley came back into the bullpen dangling his sport coat… Fifteen Jameson Rook stood in the precinct Observation Room staring in… Sixteen Nikki was tucking in her blouse as she sailed down… Seventeen The receptionist at Starr Real Estate Development popped back on… Eighteen On their drive back from the M.E.’s office, Nikki didn’t… Nineteen Heat, Raley, Ochoa, and Rook crossed through the lobby of… Twenty “Stop squirming,” said Noah Paxton. Rook started to turn his… Acknowledgments Copyright 4 of 110 05-05-2013 19:50 Heat Wave - Richard Castle file:///C:/Users/zainab/Downloads/Richard.Castle_Nikki.Heat.01_Hea... 5 of 110 05-05-2013 19:50 Heat Wave - Richard Castle file:///C:/Users/zainab/Downloads/Richard.Castle_Nikki.Heat.01_Hea... ONE It was always the same for her when she......

Words: 70446 - Pages: 282

Free Essay

Hucksters

...LACAN AND CONTEMPORARY FILM EDITED BY TODD McGOWAN and SHEILA KUNKLE OTHER Other Press New York Copyright © 2004 Todd McGowan and Sheila Kunkle Production Editor: Robert D. Hack This book was set in 11 pt. Berkeley by Alpha Graphics, Pittsfield, N.H. 10 9 8 7 6 5 4 3 2 1 Allrightsreserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from Other Press LLC, except in the case of brief quotations in reviews for inclusion in a magazine, newspaper, or broadcast. Printed in the United States of America on acid-free paper. For information write to Other Press LLC, 307 Seventh Avenue, Suite 1807, New York, NY 10001. Or visit our website: www.otherpress.com. Library of Congress Cataloging-in-Publication Data McGowan, Todd. Lacan and contemporary film / by Todd McGowan & Sheila Kunkle. p. cm. Includes bibliographical references and index. ISBN 1-59051-084-4 (pbk : alk. paper) 1. Motion pictures-Psychological aspects. 2. Psychoanalysis and motion pictures. 3. Lacan, Jacques, 1901- I. Kunkle, Sheila. II. Title. PN1995 .M379 2004 791.43'01 '9-dc22 2003020952 Contributors Paul Eisenstein teaches literature and film in the English department at Otterbein College, Columbus, Ohio, and is the author of Traumatic Encounters: Holocaust Representation and the Hegelian Subject (SUNY Press, 2003). Anna......

Words: 97016 - Pages: 389

Premium Essay

Marx

...Keenan, Marcie Patton, the Seattle FOJ, Julie Walwick, Cat Warren and David Auerbach, Diana Weeks, Lee Weeks, and Regan Weeks. An earlier version of a portion ofchapter 2 was published as "The Refusal of Work as Demand and Perspective' in Resistance in Practice: The Philosophy of Antonio Negri (Pluto Press, and 2005), a version of chapter 4 ap- peared as "'Hours for What We Will': Work, Family, and the Movement for Shorter Hours' in Feminist Studies 35, no. i (Spring 2009) and is reprinted here with the permission of the publisher. INTRODUCTION The Problem with Work Though women do not complain of the power of husbands, each complains of her own husband, or of husbands of the her friends. It is the same in all other cases of servitude, at least in the commencement of the emancipatory movement. The serfs did not at first complain of the power of their lords, but only of their tyranny. JOHN STUART MILL, THE SUBJECTION OF WOMEN oñe One type of work, or particular job, is contrasted with another type, experienced or imagined, within the present world of work; judgments are rarely made about the world of work as presently organized as against some other way of organizing it. C. WRIGHT MILLS, WHITE COLLAR Why do we work so long and so hard? The mystery here is not that we are required to workthat we are expected to or devotemuch time and so energyto its pursuit, but rather that there is not more active resistance to this state of affairs. The......

Words: 116847 - Pages: 468

Premium Essay

Learning Theory

...practical efforts remain fairly rudimentary. It is also hoped that the 'STOP and think' activities will provide the basis for initiating seminar discussion if this book is being used in connection with a taught course on critical theory. All the critical approaches described in this book are a reaction against something which went before, and a prior knowledge of these things cannot be assumed. Hence, I start with an account of the 'liberal humanism' against which all these newer critical approaches, broadly speaking, define themselves. Likewise, the currently successful versions of Marxist, feminist, psychoanalytic, and linguistic criticism all define themselves against earlier versions of each of these, and therefore I try in each case to explain the earlier versions first. I think that many of the current difficulties students have with theory arise from trying to miss out this stage. My approach amounts to throwing you in at the shallow end. Potentially this is more painful than being thrown in at the deep end - the technique used in most other student introductions to literary theory - but it does reduce the risk of drowning. It should, perhaps, be stressed that the other general introductions to theory that are now available represent a stage on from this one. They offer an even and comprehensive coverage of the entire field, but with relatively little in the way of practical discussion of applications. I find them very useful, but they seem to me to be......

Words: 98252 - Pages: 394

Premium Essay

Guide-to-Managerial-Communication-9th.Pdf

... Guide to Managerial Communication Effective Business Writing and Speaking This page intentionally left blank Prentice Hall “Guide To” Series in Business Communication Guide to Managerial Communication Effective Business Writing and Speaking Ninth Edition Mary Munter Tuck School of Business Dartmouth College Prentice Hall Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Library of Congress Cataloging-in-Publication Data Catalogue in Publication data available from the Library of Congress Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Acquisitions Editor: James Heine Director of Editorial Services: Ashley Santora Editorial Project Manager: Karin Williams Director of Marketing: Patrice Lumumba Jones Marketing Manager: Nikki Ayana Jones Marketing Assistant: Ian Gold Managing Editor: Central Publishing Project Manager: Debbie Ryan Production Project Manager: Clara Bartunek Creative Director: Jayne Conte Cover Designer: Karen Salzbach Cover Art: Getty Images, Inc. Media Editor: Denise Vaughn Media Project Manager: Lisa Rinaldi Full-Service Project Management: Aparna Yellai/PreMediaGlobal Composition: PreMediaGlobal Printer/Binder: Edwards Brothers Annex Cover Printer: Lehigh Phoenix Color Text Font: 10.5/12 Times New......

Words: 49486 - Pages: 198

Premium Essay

Reading a Novel in 1950-2000

...Reading the Novel in English 1950–2000 i RTNA01 1 13/6/05, 5:28 PM READING THE NOVEL General Editor: Daniel R. Schwarz The aim of this series is to provide practical introductions to reading the novel in both the British and Irish, and the American traditions. Published Reading the Modern British and Irish Novel 1890–1930 Reading the Novel in English 1950–2000 Daniel R. Schwarz Brian W. Shaffer Forthcoming Reading the Eighteenth-Century Novel Paula R. Backscheider Reading the Nineteenth-Century Novel Harry E. Shaw and Alison Case Reading the American Novel 1780–1865 Shirley Samuels Reading the American Novel 1865–1914 G. R. Thompson Reading the Twentieth-Century American Novel James Phelan ii RTNA01 2 13/6/05, 5:28 PM Reading the Novel in English 1950–2000 Brian W. Shaffer iii RTNA01 3 13/6/05, 5:28 PM © 2006 by Brian W. Shaffer BLACKWELL PUBLISHING 350 Main Street, Malden, MA 02148-5020, USA 9600 Garsington Road, Oxford OX4 2DQ, UK 550 Swanston Street, Carlton, Victoria 3053, Australia The right of Brian W. Shaffer to be identified as the Author of this Work has been asserted in accordance with the UK Copyright, Designs, and Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs,......

Words: 123617 - Pages: 495

Premium Essay

50 Key Concepts in Gender Studies

...offer a full and informed discussion of each concept and demonstrate how they are utilised in a gender studies context. Each entry is long enough to do justice to the, on the face of it, more complex concepts (such as psychoanalytical feminism, postmodernism, queer theory and cyborg) while drawing attention to the hidden complexities of other oft-used terms (such as identity politics, backlash and equality). To get the fullest benefit of this book, you will find it useful to read all the entries cross-referred to the concept you are interested in. In many ways, the attempt to separate out and explain these concepts in all their distinctness has drawn more interconnections and links than we had first imagined. In this way, as is often the case in feminist research, the process of explication has resulted in new insights for us. As suggested above, no such volume could pretend to neutrality, but we have tried to afford the reader a variety of stances in relation to many of the concepts, as well as trying to aid an understanding of why some issues, such as pornography, became so controversial at certain points in modern feminism’s history and why a concept such as consciousness raising should explain both the success and failures of feminism’s second wave. Our book is not intended as a substitute for reading the original works from which the key concepts are drawn, but rather as an aid to reaching an informed understanding of them. Our selection of 50 key concepts inevitably......

Words: 86432 - Pages: 346

Free Essay

Factors That Affects the Study Habits of Bachelor of Science in Information Technology Students of Neust

...cultures via the islands to the south, as well as the European influence of Spanish conquest, a domain that lasted over 300 years since the 16th century. Thus, practices from a conglomeration of sciences, religions, arts, and medical practices, are still evident throughout the islands to this present day. Prevalent, though, is a spiritualistic character that oversees the etymology or diagnosis of an illness to the actual healing. On a metaphysical level, sickness may be caused by several reasons such as a disturbed spirit which are dwellers of the animate or inanimate, nakadalapus - when one has accidentally walked through or met with a bad spirit, or even when cutting down a tree without asking permission of the spirit dweller. In such cases, an animistic food offering (atang) along with a prayer (kararag) or Latin oracion (incantation) is one solution. But for healers versed in the physical arts, hands-on therapy is also initiated to help drive away any spirit thought to have lodged itself in the etheric level of its victim. By driving away the bad spirit, the patient would get well. From the metaphysical to the physical level, an indigenous concept of a hot-cold syndrome plays an important role in how nature affects the human organism. For example, after one has worked hard in the fields, or any type of strenuous activity, the body is understood to be hot. But one who takes a cold bath shortly after, throws off the physiological state that the body is in, plunging it......

Words: 53758 - Pages: 216