Akamai's Underwater Options (A)

Brian J. Hall; Houston  Lane; Jonathan  Lim

Case | HBS Case Collection | March 2002 (Revised October 2002)

Akamai's Underwater Options (A)

by Brian J. Hall, Houston Lane and Jonathan Lim

Abstract

Akamai's stock price declines dramatically with the NASDAQ in 2000, causing virtually all employee options to go underwater. Ownership and retention incentives are largely destroyed, and employee morale falls sharply. Management weighs the pros and cons of various alternative "solutions" to this problem (including repricing, issuing a new supplemental grant, canceling the underwater options and issuing a delayed regrant, and making a tender offer to exchange underwater options for fewer shares of restricted stock).

Keywords: Motivation and Incentives; Stock Options; Attitudes; Compensation and Benefits;

Format: Print

28 pages

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Citation:

Hall, Brian J., Houston Lane, and Jonathan Lim. "Akamai's Underwater Options (A)." Harvard Business School Case 902-069, March 2002. (Revised October 2002.)

This case centers on the United Arab Emirates' (UAE) national goal of raising the happiness of its residents and visitors through ambitious government initiatives. They combined this bold national goal with an accountability structure (incentive plan) built on Key Performance Indicators (KPIs), as more typically done at a company level. A key case protagonist is Ohood Al Roumi: the UAE and the world's first dedicated Minister of State for Happiness and Well-being. She was assigned to this role by Sheikh Mohammed, the Prime Minister and Vice President of the UAE and Ruler of Dubai. Al Roumi attempted to drive national progress towards happiness in UAE society through several means: measuring happiness in the community and happiness with government services, aligning and coordinating government entities towards promoting happiness and positivity at work, and promoting happiness as a lifestyle more generally. The case details the UAE's progress through February 2018. The class discussion gives students a chance to reflect on the role of government in promoting happiness and well-being and how a government could go about encouraging happiness. The UAE in effect implemented a complex incentive scheme with the aim of coordinating attempts to increase happiness and well-being. The connection between the UAE's efforts and incentive schemes emerges in the course of the class discussion, which enables students to reflect on concrete managerial implications of the analysis.

How should nonprofits design compensation systems to attract and retain talent? GiveDirectly is a respected charitable organization with an unconventional approach. Instead of spending on traditional aid programs in areas such as health care and food access in developing countries, GiveDirectly transfers cash directly to the poor. As experiments have shown this approach to be an effective and efficient way to improve recipients’ life satisfaction, the organization has attracted considerable attention among donors and the media. Now, GiveDirectly is looking to grow, and it is contemplating how best to recruit talented employees and keep them motivated. In addition to offering salaries competitive with the private sector, GiveDirectly is considering linking employee compensation to organizational goals regarding the amount of cash transferred—an unusual strategy for a nonprofit.

Working Paper | HBS Working Paper Series | 2018

Mitigating Malicious Envy: Why Successful Individuals Should Reveal Their Failures

Karen Huang, Alison Wood Brooks, Ryan W. Buell, Brian Hall and Laura Huang

People often feel malicious envy, a destructive interpersonal emotion, when they compare themselves to successful peers. Across two online experiments and an experimental field study, we identify an interpersonal strategy that can mitigate others’ feelings of malicious envy: revealing one’s failures. People are reticent to reveal their failures—both as they are happening and after they have occurred. However, in two experiments, we find that revealing successes and the failures encountered on the path to success (compared to revealing only successes) decreases observers’ malicious envy. This effect holds regardless of whether the individual is ambiguously or unambiguously successful. Then, in a field experiment set in an entrepreneurial pitch competition, where pride displays are common and stakes are high, we find suggestive evidence that learning about the failures of a successful entrepreneur decreases observers’ malicious envy, increases their benign envy, decreases their perceptions of the entrepreneur’s hubristic pride (i.e., arrogance), and increases their perceptions of the entrepreneur’s authentic pride (i.e., confidence). These findings align with previous work on the social-functional relation of envy and pride. Taken together, our results highlight how revealing the failures encountered on the way to success can be a counterintuitive yet effective interpersonal emotion regulation strategy.

Keywords: envy; malicious envy; Emotion Regulation; disclosure; Emotions; Perception; Interpersonal Communication; Communication Strategy;

Citation:

Huang, Karen, Alison Wood Brooks, Ryan W. Buell, Brian Hall, and Laura Huang. "Mitigating Malicious Envy: Why Successful Individuals Should Reveal Their Failures." Harvard Business School Working Paper, No. 18-080, February 2018. View Details

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