...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...
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...Informe de Estrategia Chile Estrategia de mercado Ruidos en el corto plazo, pero fundamentos intactos IPSA objetivo 5.200 IPSA Actual: 4.329 Luego de un buen desempeño en el año 2010, el mercado local ha registrado una importante corrección en lo que va del año 2011, debido tanto a factores internos como externos. Un principio de año con bajos volúmenes transados como es habitual en esta época, importantes colocaciones realizadas y por venir, sumado a la salida de flujos hacia mercados como el de EE.UU. primero y la incertidumbre proveniente del norte de África y el Medio Oriente después, han mantenido presionada a la bolsa local. Un escenario más incierto debido a la inestabilidad de los países productores de petróleo, situación de Japón y un sesgo al alza en términos de inflación nos lleva a revisar nuestra estimación para el IPSA y fijarla en 5.200 puntos para diciembre de 2011. Estamos ajustando nuestra estimación para el IPSA dado que incorporamos un mayor riesgo al alza de la inflación, lo que potencialmente implica una tasa de política monetaria más restrictiva. Para determinar nuestro target estamos considerando dos metodologías, una utilizando el promedio ponderado de nuestros precios objetivos (Bottom-Up) y la otra con la relación histórica existente entre renta fija y renta variable en el mercado local (Top-Down). Mantenemos nuestra visión de mediano plazo dado que las atractivas valorizaciones abren espacio para retomar la expansión del IPSA. Consideramos que las...
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...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...
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...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 $18.75...
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...Question 1 If we ignore tax considerations and assume that Sally Jameson is free to sell her options at any time after she joins Telstar she has several chooses. She can either choose to take the cash bonus, either take the options and sell it, or she can take the option and keep it until it is worth use. Let’s compare the situations : 1- She takes the cash bonus and decide to invest it in a 5-year bond which rate is 6,02%. So at the end she will win 5310$ (=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...
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...Date: MAY 1992 Subject: Valuing stock options in a compensation Package Purpose: To determine which option worth for Mrs Jameson, and how long should she stay at Telster. Q1,2: The stock currently trading at $18.75. (20.25-18.75)x3000=4500. If she choose cash compensation package and if there is no TAX, She will receive $5000+(5000x3.8%). Obviously it is worth than stock option. Q3: The options do not vest until the fifth year and the strike price is $35. What is the price of the 5-year option? If Jameson chose stock options, she would hold European 3000 call options (early exercise is impossible) on stocks without dividends which give her the right to buy Telstar stocks at the strike price $35 per share in the 5th year from the date she joins Telstar. The option price is $2.65. Total value of 3000 call options that Jameson would receive is 3000 x $2.65 = $7943 (taxes and transaction costs are ignored), which is option premiums that Jameson can receive if she sells her 3000 granted options. Q4: If Jameson chose cash compensation package and if there is no tax, she will receive $5000 today. If she used this money to invest in 5-year T-bills, the future value of her compensation would be worth: $5000 x 1.0602 = $5301 in 5 years. $7943 is worth than $5301. If she accepts deal (stock option and job), she should untie her wealth from the fortunes of Telstar by using bull spread strategy, which is to sell identical call options with higher strike price, for instance...
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...Jameson Blake and very young and talented sophomore, that plays wide receiver for the University of Charleston. He has a great body frame of 6’2; 185lbs and runs a 4.3 in the 40 yard dash. Blake had an amazing freshman year and is on track to have another great sophomore year. Family and friends are telling him that he has a change to play in the NFL if he keeps up the good work for the next two years. Blake was originally interested in becoming a neurosurgeon but after hearing all of this talk about the NFL he wants to change his major to business something that is less challenging so he can concentrate on training and working out to get bigger faster and stronger. Below is the information and evidence that I have researched and found answers to regarding the questions that you have given to me. 1. As a peer educator and friend of Jameson I was concerned with the choices that he was making wanted to talk to someone about this, I came to you as his academic advisor know what was going on. After speaking with the parents the father of Jameson, Mr. Blake was okay with the decisions that his son was making and was behind him all the way. He said, that Jameson “has a great chance to get drafted, and at the least be would be likely to be signed as an un-drafted free agent”. Which is true in some instances, but what he doesn’t really know is that it is less of a chance coming from a Division II school, especially as small school like UC. Statistics show that 1.7% of NCAA football...
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...The question asks, who is Sally Hemings? The writer answers after reading a plethora of books and articles, historical and controversial, in the following discourse. Sally, “Sarah” Hemings was the slave and mistress to Thomas Jefferson, the third president of the United States of America. She was the mother of Thomas Jefferson’s six children he fathered with her. Sally Hemings was the young, teen-age girl taken by Thomas Jefferson to be one of the many women that he loved. Jon Kukla’s book, Mr. Jefferson’s Women, chapter 6, (page 115), uses notes from the Richmond Recorder , September 1, 1802, of which James Callender shares stories about Sally Hemings. The Recorder reveals that , “Of all the women in Thomas Jefferson’s life, Sally...
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...Thomas Jefferson was the main author of the Declaration of Independence. He was additionally the third president, therefore, he had a huge influence on America. Jefferson was a governor in Virginia. He believed in independence, but even so, was additionally a slave-owner. [3] Nicholas Wade (1999) gave a frolicsome fact that “Most people at the meeting agreed that DNA data reported last November, along with the available historical evidence, now makes it between probable and almost certain that Jefferson had a hidden family with Sally Hemings, one of his slaves. The DNA data showed that at least one Hemings descendant bore the same Y chromosome as that of the Jefferson family.” After he retired, Jefferson hit the road to his Virginia plant, Monticello, where he later founded the University of Virginia. He is a very special character, but one of his most special works was the Declaration of Independence....
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...Lord Acton stated that “power tends to corrupt; absolute power corrupts absolutely”. This statement seems to look at every individual into one singular group, that if one has had a negative outcome with obtaining power that they all will. Though there are individuals that have abused their power and corruption was eventually the outcome, not all people will follow in the same footsteps. When reflecting on the statement that Lord Acton made, I do believe that power can lead to corruption, but not necessarily every individual will fall to victim to this. With power comes certain responsibility to lead others on a positive and uplifting path, never giving in to one’s own accord. Especially with “new” power, one can easily lose their morals in the pursuit of more power. This is greed and can lead to thief, lies, and total corruption. I believe that this comes from not only power, but the monetary reward that comes with power. Unfortunately more people than most strive to become the best not for bragging rights or to help others, but for the money flow that will be created from the power they obtain. Ego will also come into play, behaving as though others cannot compare to them, in this they are losing the ability to successfully lead and falling further into the corruption. According to the science and technology psychology, “to call someone “a little Hitler” meant he was a menial functionary who employed what power he had in order to annoy and frustrate others for his own gratification...
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...Fire Evacuation Meeting December 23, 2019 0900hrs – 1130hrs Padre White Lounge Meeting called by: Positive Outlook Company Type of meeting: Planning Planning Facilitator: Tom Jones Note taker: Sally Fairfield Sally Field Timekeeper: Sally Field Attendees: Tom Jones, Fred Nerks, Sally Field, Peter Rabbit, Karen Goat, Peter Hazard Apologies: Nil Minutes of last meeting Sally Field Minutes Agenda item:O901hrs 1. Proposed Planned Evacuation Routine, Companies fire/ evacuation policies. Presenter: Tom Jones Discussion: Welcome by Tom Jones explanation of meeting purpose given Request for all phones to be turned off. Companies fire evacuation procedure need to comply with the companies fire safety policies and government by-laws. Building Plan shown Action items Person responsible Deadline Nil action required Agenda item:0938hrs Role of Fire Brigade in the event of fire or evacuation of building and requirements of this department Presenter: Fred Nerks Discussion: Fire chief would take command on delegating tasks in the event of fire. Fire Brigade free uncluttered access to all parts of building at all times Have access to building plans displaying location of exit doors fire extinguishers etc .A plan of building to be placed clearly in foyer showing locations of fire equipment, exits and evacuation assembly point. Action items Person responsible Deadline Plan of building charting the above needs Tom...
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...Decision Tree Gerber Product Company A. Background of the Company: Gerber was founded in 1927 in Fremont, Michigan by Daniel Frank Gerber, owner of the Fremont Canning Company, which produced canned fruit and vegetables. At the suggestion of a pediatrician, Gerber's wife Dorothy Gerber began making hand-strained food for their seven-month-old daughter, Sally. Recognising a business opportunity, Gerber began making baby food. By 1928 he had developed five products for the market and six months later, Gerber's baby foods were distributed nationwide. The brand eventually became a major company in the baby food industry, offering more than 190 products in 80 countries, with labeling in 16 languages and controls eighty-three percent (83%) of the baby food market in the United States. In 1994 Gerber merged with Sandoz Laboratories. Two years later, Sandoz merged with CIBA-Geigy to form Novartis, one of the largest pharmaceutical companies in the world. In 2007 Gerber was sold to Nestle for $5.5 billion. In 1960 Gerber started selling its baby food in glass jars, which often found new life as household storage, especially in home workshops. Soon after, other items such as pacifiers, , baby bottles, and small baby toys were introduced. Source: https://en.wikipedia.org/wiki/Gerber_Products_Company B. Problem Encountered and Quamet Solution Used or Applied Gerber used decision tree analysis in deciding whether to continue using the plastic known as poly-vinyl...
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...Naomi Schwartz Mrs. Ryan-Aube Human Relations Period 1 3/4/11 Forrest Gump Essay The character of Forrest Gump is one of the most beloved characters in movie history; the relationships are symbolic to our relationships in our everyday lives with people around us. The things he says have stuck with us even after we have seen the film. Momma, Jenny, Lt. Dan, and Bubba are just people that we love; these people make us who we are Momma Gump was the foundation for everything Forrest was in the movie. The way that momma interacted with Forrest is to encourage him, and reassure him that he was like everyone else. Even when unknown people on the street stared at the strange little boy with braces on his feet she made sure that Forrest knew that he was special. This was how he benefitted from his relationship with his mother. Momma on the other hand got the benefit of seeing Forrest amount to everything and more than what she imagined for her son. When the local school rejected him for a “special” school she would not take no for an answer, in these kinds of conflicts she fought for her son. Close to the end of the movie when Momma was on her dead bed she once again reassured Forrest that he was her special son.”Death is just a part of life. It’s just something we’re all destined to do, I didn’t know it but I was destined to be your momma, I did the best I could. “ Lt. Dan was a most peculiar character; he was Forrest’s Staff sergeant in Vietnam. He was dirty, and he...
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...Tyron Jake Vallesta and Sally Rivales a couple for almost three years, decided to settle down and build and face a family life. But when the time, Tyron decided to introduce Sally to his parents a complication occur. Tyron’s parents didn’t like Sally and told to there son to have a break-up to her. It cause sadness to Tyron’s heart. But, because Tyron is deeply inlove to his girlfriend he can’t do it by himself he chooses, that Sally would do the break-up. So, in able to push Sally to that he chooses to be cold to her. He rarely smiles and talks when he is with her, causing Sally to worry what’s going on to their relationship. Then one day, Sally confronted Tyron. But their conversation was interruped by the presence of Sally’s father and Javer Thompson, the guy which her father chooses to marry her daughter. Sally’s attention was drawn to her father and Javer causing Tyron to be out of place. But when Tyron decided to leave the house Sally easily notice and stop him and continue their interrupted coversation about their relationship. But, their conversation goes wrong and resulted a break-up. Sally’s POV: “ It’s been a year after we broke, the last news I know about Tyron is their family moved to another place because of his father’s job. Here I go again, facing the everyday life. Healing my broken heart and try to write compositions that describes what I feel.’’ “ Hello! How’s life my dear?” Andrea said, my beloved childhood bestfriend. “Going fine!... Moving on...
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...Considered on May 10, 1958, in Los Angeles, California, Ellen Ochoa got her leader of science and doctorate degrees at Stanford School. She was picked by NASA in 1990 and in 1991 changed into the world's first Hispanic female space explorer. A mission expert and flight build, Ochoa is a veteran of four space flights, logging over 950 hours in space. She lives in Texas with her family. Space traveler Ellen Ochoa was considered on May 10, 1958, in Los Angeles, California. Picked by NASA in 1990, Ochoa changed into the world's first Hispanic female space voyager in 1991. She continued forward from Grossmont Helper School in La Level, California, in 1975, and got a four year assertion in consistent examinations degree in material science from...
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