Stock Options at Caldera (Case 2016-02)

Case summary

An initial public offering (IPO) is the time when a company goes public for the first time to acquire capital through a stock market. It is also the time when the company founders, their employees, and the investors get to reap the benefit of their hard work. Employees are often granted options (to purchase stock) which they exercise in case of an IPO. In this case about the IPO of Caldera, a Linux distributor, early employee Frances Feldberg has to decide whether to exercise her options or not. Volatile markets and uncertain conditions, a delay between exercising options and selling shares, and local tax authorities make this a difficult decision.

Example case question [1]

  • What should Feldberg do?

Case difficulty cube [2]

  • Analytical dimension: Difficult
  • Conceptual dimension: Easy
  • Presentation dimension: Easy

Freely available materials

Materials for lecturers