All The Options That Are Fit To Print?
The New York Times writes-up the Wireless Generation situation in New York. The state’s comptroller declined to approve a contract with Wireless Gen because of the larger issues consuming News Corp. It’s unfortunate that Wireless – a genuinely innovative company – is getting caught up in problems that have absolutely nothing to do with it and also worrisome in terms of the future of the company and the shadow the NewsCorp problems are casting.
But one part of the story jumped out at me as incomplete in an important way:
New York will still work with Wireless Generation indirectly, as part of a consortium of states building a shared data framework known as the Shared Learning Collaborative. Financed by the Bill and Melinda Gates Foundation, the $44 million project, awarded to Wireless Generation in June, is being directed by Stacey Childress, a former board member at Wireless Generation. She stepped down and sold her stock in the firm before taking the position at the Gates Foundation, a Wireless Generation spokeswoman said.
That’s all accurate but it’s not the entire story – and I have a little visibility into this aspect of it. Childress had about 30,000 options on Wireless stock when she left the company’s board because Wireless paid board members in options rather than cash. Her options were priced at $2.50 and $2.75. When she went to the Gates Foundation Childress sold them – using a conservative valuation method – for $1.33, roughly half of their book value. The exact price per-share Childress (and other board members) would have received when Wireless was bought by NewsCorp is not public information but a reasonable estimate of her share’s worth is $300-$400K.
In other words, she left well more than a quarter-million on the table in an effort to avoid conflicts of interest and do the right thing.
What’s more, Childress declined to do cash-for-service consulting for Wireless because she taught a Wireless Gen case in her course at Harvard Business School and didn’t think it was appropriate.
Let’s be clear, Childress will be able to put food on the table while working at the Gates Foundation and in the future but, still, that’s a lot of money to pass on in order to take a job where you think you can have social impact. And it’s a good example of how people have to navigate complicated situations and make tough calls. So the next time you hear someone braying about how everyone is just in education reform to make money, remember this example. Plenty of people do the wrong thing (in every industry) but in our field plenty more disadvantage themselves and their families in an effort to do the right thing.
Disclosure: Bellwether has worked with Wireless Gen but we were not involved in the News Corp acquisition and don’t hold stock or options. Bellwether also works with and is funded by the Bill and Melinda Gates Foundation.
August 30th, 2011 at 10:22 am
It’s revisionist investing from Eduwonk today.
Maybe the shares were worth half the book value when she sold them?
And, maybe they would have been worth less had the company not been bought by News Corp.?
Who knows?
Did Ms. Childress know Wireless Gen was being sold to News Corp and still sell her stock for $1.33? If so, then one can give her credit and maybe question why she was teaching at Harvard Business School, as it doesn’t sound like good financial management.
But without a timeline and dates for all these stock options and buying and selling – your information here is selectively presented and misleadingly generous to Ms. Childress.
Maybe her $1.33 was the best deal offered and the best deal she thought she could get? Who knew King Murdoch was lurking?
Maybe only Mr. Klein.
August 30th, 2011 at 12:23 pm
Let’s be clear, Childress will be able to put food on the table while working at the Gates Foundation and in the future but, still, that’s a lot of money to pass on in order to take a job where you think you can have social impact.
I will genuflect to her selfishness.
August 30th, 2011 at 12:25 pm
Oh, Lord.
That should be “her magnanimity.”
August 31st, 2011 at 4:06 pm
“she taught a Wireless Gen case in her course at Harvard Business School”
Would that be the Montgomery County Public Schools – Wireless Generation secret no bid deal where Montgomery County taxpayers invested $500,000 in WG but lost their shirts?
Childress also co-authored a book about the Montgomery County Public Schools, but it was never disclosed to the public that she was also on the Board of Wireless Generation, a vendor receiving about half a million dollars a year from the school system (in addition to $500,000 investment in company).
http://parentscoalitionmc.blogspot.com/2009/11/ask-congress-about-mcps-investiment-in.html
http://parentscoalitionmc.blogspot.com/2009/11/ask-congress-about-mcps-investiment-in.html