Michael started a new job as Senior Vice-President of Goofy, Inc. a publicly-traded corporation on the New York Stock Exchange in March, 2019. As part of his hiring, he signed a stock option grant agreement giving him the opportunity to purchase 80,000 shares of Goofy stock at an option price of $.05 per share. Three months after signing the stock option agreement, he received the following email from the Vice-President of Finance and Operations:

"Subject: New Stock Option paperwork

Due to an administrative error following the March board meeting, all grants were shown at a price of $.05 instead of the Board-approved $5.00 per share. I have the corrected paperwork in my office to hand out. When you get a chance, please come by to pick this up at my office. I can then answer any questions you might have prior to signing." She added: "Of course, you are all aware of the trading price of the firm on the exchange, so I suspect that this correction would be obviously to all of you."

Michael exercises his option and was planning to pay $.05 per share. Now, it will now cost him up to tens of thousands of dollars more, depending on the number of shares he chooses to buy.

Michael asks your advice. What do you think is the best argument he can make to require Goofy to sell the stock options at $.05 per share? Explain. (10 credits)

What do you think is the best argument Goofy, Inc. can make to require him to pay $5.00 per share if Michael decides to purchase the stock options?(10 credits)