Options
CHAPTER six
The smell hit me as soon as I opened the door to the kitchenette. The room smelled like old garlic. Fresh cooking garlic smells great and garlic tastes great when you’re eating it. But the next day, look out. I’m sure this is what Mrs. Skunk smells when she wakes up in the morning and Mr. Skunk breathes hello.
I looked around the kitchenette. The counters and table were piled with odd Tupperware bowls and platters heaped with non-perishable food. Everything was covered tightly in plastic wrap. The smell must be coming from the garbage, I thought. I put on a pot of coffee to brew and opened the fridge for a container of cream. I had to reach past several bowls of salads and platters of meat, also wrapped in plastic. Someone had done a good clean up job last night after the reception.
The kitchenette was off the main boardroom and this was the room where the caterers worked. Normally, they take all leftovers with them and there is never any evidence left the next day. Last night's left-overs would disappear fast when the staff realized there was something for free to be had in the fridge. I eyed the baked goods laid out on the counter and lifted the plastic off one plate heaped with brownies and ate two while I waited for the coffee to brew.
As I walked down the hall to my office I noticed signs of the place coming to life. I heard a voice in Didrickson’s office and I could hear the normal bitching coming from behind the partitions where the paralegals and secretaries sat in an open area. They were having trouble deciding who was going to call Ray about the system being down. Jesus, what a bunch of lame ducks, I thought.
"Don’t worry," I called over the partition. "Ray’s on the case. I’ve already talked to him."
The chatter stopped.
"Kate, how’s Ev?" one of the voices asked.
I slowed down before entering my office and turned around. Four half faces peered at me over the partitions.
"She died last night," I said abruptly. Jackie gasped and immediately started to cry. I turned on my heel and closed my office door behind me.
I sat down at my desk and put my head in my hands. Gee Kate, how to handle the staff. How to give them the news gently. One of your better skills. Diplomacy at its best. More like gunboat diplomacy. I dialled Jay’s number and after three rings his phone kicked over to voice mail. "Call me as soon as you get in," was the message I left.
The first time I laid eyes on Jay Harmon I thought he was the most beautiful thing I had ever seen. I had just turned six years old and was desperate for a baby brother or sister. My mother would look at me like I was from another planet when I would ask her why we didn’t expand the family. My brother and I were the only children and as far as my mother was concerned, two were plenty.
Cheryl Harmon was my best friend and she had three of the best sisters a person could want. Cheryl said that was my opinion. As far as she was concerned, if they all left her alone and took a flying leap (her words), then they’d be the best sisters a person could want. Jay was the fifth child and only boy.
I first saw him when he was three weeks old. Their father left two weeks later and I don’t think anyone has heard from him since. He could be dead for all they know. His mother carried on, working two or three jobs, depending on the season. They were very close and I guess in those years they learned the meaning of teamwork. My brother and I had to do chores at home but nothing compared to what Cheryl and her sisters were expected to do. That sort of upbringing builds character, I suppose.
Jay was everybody’s baby. His sisters took turns mothering him and often times there were fights over who got to play with him. Lucky for his sisters he was a very placid child. Jay got along with everyone.
By the time Jay started kindergarten he could read, print, write, add and subtract. For the first three years of his life his sisters played house with him but when they got bored with that they started playing school. He was their pupil and he soaked it all up. When he graduated high school he was offered a scholarship to the University of Toronto. He completed his degree in business and applied for a scholarship at the Richard Ivey School of Business at the University of Western Ontario to do his MBA. When he graduated from Western he came to work at our company.
Jay was recruited on campus to join our firm in the management trainee program. The MBA recruits would spend equal time over five years in the finance, human resources, research and development, sales, and delivery and support departments. To MBA graduates our company was an attractive place to start a career and it had all the magic ingredients: high tech, public company, management training program, full benefits, stock options, and a starting salary of $75,000. Jay’s first rotation was working for Tom James in the human resources department where he mastered the tasks and our computer systems by the second day and was completely bored by the end of the first week. I talked to him about slowing down a little, soaking up the surroundings and learning by listening. He wanted to be the chief operating officer of the company. I told him he had to be there at least three months before he could apply for that job. He thought I was serious. I’ve been working on his sense of humour ever since.
Jay finished his second rotation in Sales and nine months ago he joined the Finance Department to work with Richard Cox, who was wearing two hats as our chief operating officer and chief financial officer. Lately, Jay felt he was doing some useful work. Cox had him working as part of the team on acquisitions and company financings. He also worked almost exclusively with Cox on stock options and materials presented to the board of directors.
My phone rang for the first time that morning. I glanced at my watch. It was eight-thirty. Everyone must be avoiding me.
"Kathleen Monahan," I answered.
"Kate, it’s Jay. How’re you doing?" His voice was soft and his concerned tone almost starting me crying again.
"I’m okay. We’ll do fine. How’d it go last night? How’s Danny?" I hurried to change the subject.
"He’s coping. His brother and sister are there with him. I told them to call me if they needed anything."
"I had a message from Ev on my system when I checked my messages this morning."
"God, that’s so weird," he said. "What did she want?"
"Nothing. Just said she was looking forward to having a drink with me at the party last night. Jay, I miss her so much already."
"I know. Everyone around here is going to miss her. I wish she were here right now. Rick Cox has been yelling for an option summary this morning. Have you got any idea when the system’s supposed to be back up? If Evelyn were here I could get a printed copy but I couldn’t find one in her desk."
"Who cares about stock options and Rick Cox? He’ll probably forget in an hour that he asked you for it. I can see everyone’s going to have a decent mourning period for Evelyn."
Jay chuckled. I didn’t think it was funny. But he was probably laughing at me, not my comment.
"Who put the bug up Rick’s ass about options?" I asked.
"I think Oakes is on his case. Maybe they’re going to approve some more grants of options at the board meeting."
Stock options for the executives are the driving force behind recruiting at our company. Options are an incentive, like a future bonus, given to executives when they’re hired. The reward for the executive is when the stock price goes up and they cash in. There’s no mystique to options as far as I was concerned, but it was amazing the number of executives who never understood the value of what they had.
Many executives have come into my office and I’ve had to give them my basic primer on options. Stock options are simply the option for the executive to buy shares in the company. There were always three significant factors I would go over: the number of options granted, the exercise price of the options, and when the options were available for exercise.
The number of options granted varied, depending on the executive, and this was one factor that every executive clearly understood. They knew how many options they ha
d but in most cases, that was the extent of their knowledge and understanding.
The exercise price was the price at which the executive could buy the shares from the company. This price was the closing price of the company’s shares on the stock market on the day the options were granted to them.
In our company, options were usually available for purchase, or exercisable, one year after they were granted.
So, simply stated, if an executive was granted 1,000 options at an exercise price of $10.00, it meant that when the shares were exercisable, he could purchase from the company, 1,000 shares at $10.00 per share. If he elected to exercise (or purchase) those options (shares), he paid the company $10,000 and the company would arrange for the executive to be the registered owner of the shares. He could then turn around and sell those shares on the stock market. If the shares were trading at $15.00, he would make $5.00 a share, or a $5,000 profit. Definitely not rocket science.
Usually, top executives were granted 100,000 options when they were hired and depending on their performance, more options were granted each year. Several of our top executives were holding over 500,000 options. Most of them had exercise prices between $8.00 and $10.00. The shares were trading at $11.00, so there wasn’t a lot of money to be made right now.
There was a time about three years ago when the shares had reached $16.00 on speculation that we were being taken over but because of insider trading rules none of the executives could 'cash' in. Harold Didrickson had informed everyone that there were 'windows', or time periods, when it was legal to exercise their options. At the time the shares skyrocketed to $16.00, our audited quarterly financial statements were in the process of being finalized. Our executives knew about the financial results and the public didn’t, so that was considered a closed 'window' because they were in possession of inside information, and therefore, it was illegal to trade in the company's shares.
Options are an incentive to the executives to make sure the company grew and made a profit. The executives understand the word incentive, but profit is a word we’re still looking for in the company dictionary.
Grants of stock options have to be approved by the board of directors and once that was done, the lists of exercise prices and numbers of options granted are given to Ev to enter into the company’s main computer system. After the information is entered, Ev would be able to tell the value at any given time of an executive’s total stock option package.
Jay would also use the same system to generate reports for Rick Cox on how many options were outstanding and how many options were still available to issue. Legally, the number of options granted cannot exceed more than 10% of the company’s issued and outstanding shares. TechniGroup’s number of shares issued and outstanding was a constantly rising number because each time we acquired another company we would give the owners shares in our company, rather than cash. So with the number of shares constantly rising, the 10% limit was always going up.
"I’m leaving on time today," Jay said, "and if the system’s not back up to get that report, Rick’s going to have to get it himself."
"Yeah, right. Rick wouldn’t know where the on/off button was on his computer. The guy’s a techno-phobe. And you can quit your whining, you’ll work until the cows come home. When was the last time you left the office on time?"
"I know, I know. Besides, Rick wouldn’t know how to get into the stock option system even if he figured out how to turn on the machine."
There were three people who could access the stock option system: Rick Cox, Jay and Evelyn. Rick didn’t know how to use the system and with Evelyn gone, that left Jay to do all the work.
"Well, I’m leaving on time today. Call me later if you need any help finding things in Ev’s office." I hung up.