Reference no: EM131627558

You are an associate/analyst for a small, privately held consulting firm called Jamieson & Associates (Jamieson). Jamieson provides financial consulting services and investment research for firms that are seeking merger partners. It provides these services both to companies that seek to acquire other companies and to firms that are under scrutiny as possible acquisition targets. For personal reasons (you are following your spouse to another city), you are about to terminate your employment at Jamieson and are negotiating a final compensation package, including some back pay for sick days you did not take and a "stock buy-back." You will be discussing these issues with the new (hired in the last six months) Managing Director of Jamieson, T. Roberts.

The sick day issue is relatively simple. Over the 5-year period of your employment, the firm's records show that you did not use 25 of your sick days (although you happen to know the firm mistakenly failed to record 5 days you took two years ago). You would like to be compensated for the 25 sick days at your current salary rate of $400/day for a total of $10,000. The firm might argue that you should be paid for these days at the average salary rates that applied in the year the sick day was accumulated, yielding a total of only $6,500. You have heard stories that Jamieson has calculated this either way, depending on how good the employee record is.

The "stock buy-back" issue is a little more complex. During your 5-year employment at Jamieson you participated in a special stock purchase program that permitted you to purchase 40 shares of Jamieson at the "adjusted book value" of the firm each December 31st. You acquired 200 of the firm's 20,000 outstanding shares in this manner at an overall average cost of $50 per share. The agreement you signed when you purchased these shares provided that you would be required to sell them back to Jamieson if you left Jamieson's employment for any reason. The valuation method stipulated in the agreement for setting the share price calls for the shares to be valued using the "adjusted book value of the shares on the December 31st which coincides with, or immediately precedes the date of termination" of your employment. So far as you know, this provision has always been enforced for employees who left the firm, although there was one case last year in which a female employee was allowed to keep her shares as part of the settlement of a "wrongful discharge" case in which she alleged sexual discrimination against a senior member of the firm.

It is now November 15th and, although you could stay into January if necessary, you would not mind joining your spouse (who will relocate in December). If you leave now, you would take the book value from last December 31st ($100/share). If you stay until December 31st of this year, you will get the new book value (which you do not know but assume will be higher). You probably could also negotiate to receive any value between $100/share and this year's new adjusted book value as a settlement of this matter and leave whenever the firm would let you. You feel you have learned a lot at Jamieson and have performed exceptionally well for the firm (with the exception of your last performance review, which was conducted by the same "wild card" partner that triggered the sexual harassment claim last year).