Business 1st Edition by William Nickels ,James McHugh ,Susan McHugh

Exercise 1

Wagging the Dog
After 35 years of hard work you finally made it to the post of chief executive officer of Laddie Come Home, a large producer of pet foods. As part of your new compensation package, you are entitled to bonuses based on the company's stock performance. If the stock price of Laddie Come Home exceeds $50 a share during the current fiscal year, you could realize close to $3 million in bonuses. The stock is currently selling for $42.
A financial institution specializing in mergers and acquisitions tells you that a major competitor, Barking up the Wrong Tree, wants to acquire your company for upward of $50 a share. Your attorney says the merger is perfectly legal and poses no antitrust problems. You realize your board of directors would probably agree if you suggested selling the company. Unfortunately, at least half your current employees would lose their jobs in the merger. Many of these employees have been with the company over 20 years.
You plan to retire within the next two years, and a $3 million bonus could make life easier. What are the ethical considerations in this situation? What are your alternatives? What are the consequences of each alternative? What will you do?