In the previous post, we presented a basic framework for
analyzing the impact of foreign exchange fluctuations on
quantifying financial remedies. We argued that the treatment of
foreign exchange should be consistent with the principal underlying
the financial remedy being awarded; we referred to this as a
"matching principle".
In this post, we extend that basic logic to consider other
scenarios.
What if we are not sure how to match?
Consider Mr. Canuck, an executive working for a Canadian
subsidiary of a US-based public company is wrongfully terminated.
As a result, the stock options to which he would have been entitled
as of July 2009 did not vest. He sues for wrongful dismissal, and
is successful. His damages are assessed as the difference between
the exercise price ($1 USD per share) of the options and the market
value of the stock on July 2009 ($10 USD per share). The trial
occurs in 2011, and an award for damages is granted shortly
thereafter.
