Publications
Publications
- November 2013
- HBS Case Collection
Larry Steffen: Valuing Stock Options in a Compensation Package
By: William E. Fruhan and Craig Stephenson
Abstract
New MBA graduate Larry Steffen has accepted an attractive job offer from Athena Global Technology but must now choose one of two alternative compensation plans. The first compensation plan option includes a base salary plus a $25,000 cash bonus, and the second includes the same base salary plus employee stock options. In order to evaluate and decide on one of these plans, Larry must estimate the value of the offered stock options and consider several complicating factors, including whether he will remain at Athena for the five-year vesting period necessary to receive the options. This case introduces students to option valuation and facilitates a discussion about the effectiveness and potential benefits and problems associated with the use of stock options in compensation packages.
Citation
Fruhan, William E., and Craig Stephenson. "Larry Steffen: Valuing Stock Options in a Compensation Package." Harvard Business School Brief Case 914-517, November 2013.