Case 1 (Ch.7)
Gillian Lee is the senior administrative assistant to Jerry Adams, the vice-president of operations for Global Potash Enterprises. GPE is staking its future on its purchase of a mineral concession in northern Saskatchewan. The GPE stock price has been very volatile recently as investors await the publication of a geologist’s report on the size of a potash deposit on GPE ’s concession. Right now investor opinion is optimistic, and GPE stock price is at a 52-week high. The geology report is due out in two days, but Jerry has already received a preliminary copy, and Gillian saw it on his desk. Not only did she see the report, she took a moment to glance inside it. The report is very bad news. There is not enough potash in the ground to make mining worthwhile, and GPE is in trouble. Its stock price is likely to collapse when investors see the report. Also GPE will have to make significant staff layoffs. Gillian is happy at GPE and Jerry has been a great boss, but she sees that she will be let go or asked to work for a secretary’s salary. Ever since GPE gambled on this potash concession, Gillian has been fantasizing about what she might do. One of her tentative plans involves betting against the stock price of GPE by secretly buying put options on GPE stock. She knows the penalties for insider trading are severe, that securities regulators are very diligent at discovering perpetrators, and that suspicion will fall on Jerry and those around him because of Jerry’s position as VP . However, she has a second cousin, Patrick Lee, in Hong Kong who buys and sells securities. She thinks that if she goes to an Internet cafe, sets up a new webmail account, emails her cousin Sally Wong, and asks Sally to ask Patrick verbally to buy her 50,000 put options on GPE stock, then securities regulators will never know what she did. Her credit is good with Patrick, and she can trust Sally and him as family members. Exercising those put options will not make her hugely wealthy, but it will enable her to fund an MBA and get a new and better job. Though she has dreamed up this plan, and she does not think that regulators will notice, she is still worried. She is an administrative assistant, not an officer of the firm. Yet, she feels an obligation to her firm’s stockholders to further their interests, and an obligation to Jerry not to take advantage of his trust. She has always been loyal and honest at work. She has many friends at GPE , and enjoys being a member of the GPE community. She does not feel much obligation to the speculators who will be selling her the put options, even though she will perhaps be deceiving them. Because she is not an officer, insider activity reports would not reveal her trades to the market. Her relatively small transaction will have little effect on GPE ’s final share price, or put any stockholder at an unfair disadvantage. GPE has paid both for the concession and for the geology report.
Case 2 (Ch.8)
Professor Harold (Harry) Jenkins has just become Dean of the Faculty of Management at Eastern University. At just 35 years of age, Harry is the youngest Dean in EU history. EU has approximately 2,000 students majoring in management studies and another 200 doing their MBA s. The EU management faculty has 50 professors and 20 support staff, with the following gender breakdown. Men Professors Support staff Students 45 2 1,000 Women 5 18 1,200 The EU teaching faculty is a good one. Its members are very competitive and do a lot of excellent research. University support for instructional development and a system of student and peer evaluation help ensure that faculty members are committed to teaching excellence. The faculty, staff, and students are on a first name basis. The EU management faculty has received permission from the EU Board of Governors to hire a new assistant professor of finance. The search committee has recommended two names to Harry. One is a young woman, Dr. Anna Orsini, who received her PhD five years ago and has since been teaching part-time while she raised two small children. The other is a young man, Dr. Jon Schmidt, who spent five years working on Wall St. before recently completing his PhD. Both appear to be good teachers, but Jon has significant work-experience, and several publications, whereas Anna has published just one article based on the research in her thesis, and no relevant work-experience. As the Dean, Harry must make the final decision regarding whom to hire. Harry thought that Jon would fit right in to the culture of the management faculty. He would make a fine colleague, would engage with other faculty members on their research, and provide a model to students of how to manage a busy and successful career. Harry thought that Anna would not fit so readily into the present culture of the department, but would instead challenge it. She would contribute to changing the department into a more caring, more cooperative, and less competitive workplace. She would also provide a good role model for the many female students in the department, and would be a supportive colleague for the five other female professors. Hiring Anna would show a commitment by EU Management Studies to nurturing the potential excellence of women as well as men
Ch. 7: Should Gillian put her plan into action?
Ch. 8: Should Harry hire Anna?