Jimmy Fu and Moog Inc.

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________________________________________________________________________________________________________________ Craig Chapman, Assistant Professor, Kellogg School of Management, prepared this case specifically for the Harvard Business School Brief Case Collection. This case was prepared solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case was developed from published sources including multiple 10-K filings of Moog, Inc., which havebeen simplified for the purposes of the case. Copyright © 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. CR AIG CH APM A N Jimmy Fu and Moog, Inc.: Understanding Shareholders’ Equity Background Early in 2009, Jimmy Fu pondered the outcome of the interview he had just completed with the head of Human Resources at Moog, Inc. Jimmy was being considered for the role of Director ofFinancial Analysis and Planning at Moog, a position that was vacant due to the promotion of Jennifer Walter to Controller and Principal Accounting Officer. At the end of the discussion, he was handed a stack of paperwork on the company and its H.R. policies. Although impressed with the atmosphere at the company and its objective to make talented and enthusiastic employees work together to solvecomplex and difficult technical challenges (their words, not his), he really wanted to understand the employee compensation package he was being offered. The first page on the company claimed Moog to be a worldwide designer, manufacturer, andintegrator of high performance precision motion and fluid controls and systems for a broad range ofapplications in aerospace and defense, industrial and medical markets. The company had fiveoperating segments: Aircraft Controls, Industrial Systems, Components, Space and Defense Controls, and Medical Devices which account for 35%, 28%, 18%, 14%, and 5% of sales, respectively. However,to Jimmy, it looked like Moog made highly engineered valves and controls used in some coolapplications. Indeed, he had first become aware of the company in relation to its role providing the motion controls for the roofing system on Centre Court for the All England Tennis and Croquet Clubat Wimbledon as well as its work on differential, clutch, and transmission controls for Formula 1racing cars. He was also excited to see the rapid growth in Moog’s wind turbine control business.Other than that, he thought that the company looked a lot like a small version of General Electric.As Jimmy reviewed the information he had been given, it continued with relatively conventionallanguage: “The people who work for Moog are the power and energy behind everything we do. We're committed to looking after them in a way that really says 'thank you.' In addition to salary, weoffer a benefits package that is designed to attract and motivate the best talent, and gives our employees genuine security.” This supported what he had been told during the interview—thatalthough benefits varied from location to location, they would be competitive. Given that he would be relocating to East Aurora, New York, he had been told that his package would include a generous 4203 JU NE 14 , 2 010 Page 2

4203 | Jimmy Fu and Moog, Inc.: Understanding Shareholders’ Equity 2 BRIEFCASES | HARVARD BUSINESS SCHOOL relocation package, comprehensive health program, retirement plan, and recreational activities which, he smiled, would apparently include holiday gatherings, picnics, and sporting events.As he read further, the language...
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