S05.2_CFP_Amanda Chen Case Questions.pdf - INSEAD\u2028MBA Program 20D Corporate Financial Policy Professor Junyuan Zou Amanda Chen and Amazon\u2019s

S05.2_CFP_Amanda Chen Case Questions.pdf - INSEADu2028MBA...

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INSEAD MBA Program 20D Corporate Financial Policy Professor Junyuan Zou Amanda Chen and Amazon’s Equity -linked Compensation Questions: 1.Ignoring tax considerations and assuming that Amanda Chen is free to sell her options at any time after she joins Amazon, how much is the option compensation package worth at the time she decides to value it? 2.List several factors ignored in your answer to question 1, which are likely to have an impact on Amanda’s valuation of the options and on her choice between the two employers. Where possible, discuss how Amanda might adjust her calculations to allow for these factors. 3.In recent years, many companies (e.g. Microsoft) have decided to give shares grants rather than options grants as equity-linked compensation. In the context of the case, consider a scenario in which the two alternatives are: the stock option grant as described in the case, or
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