Preface of Textbook
About the Textbook
About the Authors
Book Website at McGraw-Hill
DVD Contents
Stanford 1e Book Website
McGraw-Hill 1e Book Website
Book Contents
Table of Contents
Venture Opportunity, Concept and Strategy
Venture Formation and Planning
Functional Planning of the Venture
Financing and Building the Venture
  Business Plans (App. A)
  Case Studies (App. B)
Online Sources (App. C)
Sample Syllabus
Course Overview
Calendar of Sessions
Entrepreneurial Perspective
Idea or Opportunity
Gathering Resources
Managing Ventures
Entrepreneurship and You
Additional Resources
Schools Using This Textbook
Authors Blog

How do employee stock options work? This is an important consideration when choosing between different job offers and a good skill for every student to have. We follow Barbara Arneson through her analysis of company metrics to determine the worth of her different stock option plans.


Relevant Texbook Chapters


Discussion Questions

  1. What is the number of shares outstanding at BioGene as of May 31, 2006? What is its current PE ratio? Why do you think it is higher than the current average of other bioinformatics companies (hint: consider the recent annual growth rates of revenues and profits)?
  2. What is Barbara's percentage ownership in each firm?
  3. Compare the firms in 4 years (i.e. 2010) when the stock options will be fully vested. Assuming Barbara remains employed until that time, which stock option offer is better? Make sure to include the cost of the stock options and state all critical assumptions.
  4. In your opinion, which of barbara's stock option packages is better? Why?
  5. Practice negotiating with the other company's offer within your group.
  6. What other factors (in addition to the stock options) should Barbara consider?
Main Case Study: Barbara Arneson: Which job?
Barbara Arneson must decide which job offer to take. With all other factors being equal, she is now down to a decision based on the value of the stock options offered by each company. One company is a public company with easily gathered data on the financial status of the company. The other offer is from a start-up company which has only financial projections.
How Stock Options Work
An introduction to employee stock-option programs and how they work. Covers major principles such as strike price vs. market price, vested and exercising options and the basics of how dilution works within a company.
CPA's Incentive Stock Option FAQ
A thorough FAQ covering employee stock options issues, including taxing on incentive and non-qualified stock options, what happens to options when the employee leaves, the holding period, fair market value etc.
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