Essay on Sensitivity Analysis Guide

1788 Words Oct 4th, 2013 8 Pages
Assignment #3 BLAW 502 (Summer Class I, 2013): The Richard Spellman Case
Total word count: 1724
1) Is there any need for Spellman to wade through the draft documents?
(224 words)

There is definitely the need for Richard Spellman to go through the draft documents. He needs to ensure that the employment deal that he had discussed with Walt Sawyer was in fact what the contract spelled out and that all information that has been exchanged informally, has been taken into consideration on the formal agreement.. In the “Open Items” email sent by Spellman to Sawyer, the only topic that wasn’t explained in further detail was Spellman’s base salary; further in-detail clarification was provided for bonuses, equity, and equity pool. Spellman
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Spellman wanted to clarify how his compensation package would be affected under each of these scenarios.

4) What is the relationship between the Employment Agreement and the restricted stock grant? Are there any other provisions in the draft Employment Agreement or Restricted Stock Agreement that are problematic for Spellman? (807 words)

The relationship between the Employment Agreement and the Restricted Stock Agreement is that the restricted stock and its provisions and qualifications are going to be part of Spellman’s compensation package. The fact that Spellman is supposed to receive the restricted stock should be spelled out in the Employment Agreement. However, the Employment agreement does not included some of the things that Spellman and Sawyer seem to agree to in their emails including the restricted stock and IPO elements.

In Spellman’s email to Walt Sawyer, Spellman wants confirmation and clarification on four items pertaining to his compensation package. 1) Base salary would be $200,000, 2) A bonus of at least 30% of the annual salary, 3) He would receive 3% equity in the company in the form of restricted stock that would be vested in 1/3 annual increments with 100% vesting upon change in control, and 4) Additionally, he would receive 1% at IPO. The rest of his email pertained to operational questions concerning the Equity Pool for incentives for hiring other executives that are not part of his

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