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Supplements the (A) case.

Level 3's unique compensation plan rewarded managers for the firm's performance only if the firm's stock price movement exceeded that of the market. This design was intended to maximize shareholder value by tying manager's performance more closely to that of the firm, rather than tying it to the level of the overall market. The past year had been a difficult one for the telecommunications sector, and Level 3, like many other firms, was concerned about both retaining employees and adequately compensating them. Moreover, Level 3 needed to hire a substantial number of employees over the coming year, and the firm's compensation plan would play a significant role in attracting good employees. With the annual compensation committee meeting approaching, the CEO must reevaluate whether the plan was successful and whether any changes were warranted. Possible changes included changing its benchmark index from the S&P 500 to another (perhaps more specialized) index and adjusting the size of the indexed option grant and its cash/option mix to produce the right incentives in light of falling stock prices.

Spreadsheet Supplement for case 202084

Student spreadsheet for case UV0014.

Spreadsheet to (9-201-068). Presents exhibits 1 and 2. Download only.

Spreadsheet to (9-201-068). Download only.

Spreadsheet to (9-202-045). Download only.

In January 2001, the senior management committee of this company has to decide which major projects should be funded for implementation by the company starting in 2001. The board of directors arbitrarily set a limit of (euros) EUR120 million to be spent on capital projects in 2001. Various managers, however, have proposed projects totaling EUR316 million. The task for the student is to evaluate the completed discounted cash flow (DCF) analyses presented along with qualitative factors (mainly strategic considerations and internal politics of the company), and to choose the projects to be approved.

Spreadsheet for case UV2402

Spreadsheet for case UV2495

New World Development Co. Ltd. (NWD) was a leading conglomerate based in Hong Kong. After more than 20 years of operations, the group had expanded its core businesses to include property, infrastructure, services, and telecommunications. From late 1997 to June 2001, the stock price performance of the company had been abysmal. Its efforts at asset disposals to reduce gearing, while making additional investments in new businesses, confused investors. Security analysts also blamed the company for not keeping its promise to focus on its core business of property.

Although mortgage securitization was old hat in the United States and Europe, it had not really caught on in Asia. Past experience in Hong Kong suggested that efforts by individual institutions to securitize mortgages had not been entirely successful. In spite of this, the Hong Kong government placed high hopes in Hong Kong Mortgage Corp. (HKMC) to develop the mortgage-backed securities (MBS) market. However, some banks wondered whether it was timely for them to get into the MBS business in Asia. In particular, the banks and the HKMC had very different risks and concerns regarding the development of MBS. Teaching Purpose:

The Ontario Teachers' Pension Board is a nine member board appointed to administer the well-established Ontario Teachers' pension plan. At one time, there were concerns that the plans value of liabilities was exceeding the value of assets. Through the board's investment strategy, the plan turn itself around and now had a surplus. The board needed to consider the best investment options for this surplus to reduce the risk of surplus loss. One option is investment in timberland - land with the potential to grow commercial tree crops. The board's director of research and economics is preparing an analysis of the pros and cons of investing in timberland and must recommend whether the board should consider such an investment.

This note focuses on some of the methods used in the valuation of private companies. It looks at the differences between private and public companies for valuation purposes and the importance of making a reliable estimate. Also discussed are discounted cash flows, comparable valuation techniques and the limitations and challenges presented by a private company valuation.

A new director of this small German brewery must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 2001, (2) declaration of the quarterly dividend, and (3) adoption of an incentive-compensation plan for the marketing manager. The task for students is to evaluate the past and prospective financial performance of the company and to critique its liberal credit and inventory policies.

This case presents a capital budgeting problem. Whirlpool Europe is evaluating an investment in an enterprise resource planning (ERP) system that would reorganize the information flow throughout the company. Students derive the cash flows from working capital, sales, and other improvements along with the cost of the investment.

Spreadsheet to (9-201-068). Download only.

Spreadsheet for case UV2168

Spreadsheet for case UV2314