Dividends Mediation

DIVIDENDS MEDIATION

1YOUNGER Brother (or Sister)

You and your older brother (or sister) are co-owners of ICMP Company Inc., a family-owned corporation that makes small electrical equipment. The company was started by your father. When he died, he left 50 percent of the company to you and 50 percent to your brother (or sister). You and your brother (or sister) are the only members of the company's board of directors. Your brother (or sister) took over the day-to-day management of the company after you father died, and you have not had any reason to complain about the management. Your only real contact with the business is when you meet with your brother (or sister) at the annual shareholders board of directors meeting. Your brother (or sister) gets paid a good salary for running the company. You have another job and do not work with the company.

The company made $100,000 in profit this year. Each year for the past five years since your father died, you and your brother (or sister) have voted at the annual board of directors meeting to pay out all of the company's profits as dividends. You and your brother (or sister) have divided the profits equally. For the past few years the profits have been:

YEAR / PROFITS / USE
This year / $100,000 / ???
1 years ago / 70,000 / Distributed equally
2 years ago / 87,000 / Distributed equally
3 years ago / 110,000 / Distributed equally
4 years ago / 90,000 / Distributed equally

At the annual board of director's meeting you suggested that all dividends be paid to you and your brother (or sister) again. However, your brother (or sister) wants to reinvest all the dividends into the company this year. Until now you and your brother (or sister) have had an excellent relationship, but because of your conflict on this issue, your relationship has become very difficult. All your efforts to reason with your brother (or sister) have failed. You are now willing to try mediation.

ONLY REVEAL THE FOLLOWING INFORMATION IN THE PRIVATE MEETING (CAUCUS) AND ONLY IF THE MEDIATOR ASKS APPROPRIATE QUESTIONS.

Normally you use your share of the dividends to take your family on vacations. However, this year you want to use the money for your children's education. You have twins (a boy and a girl). This fall they will start college. You think that you will need an additional $20,000 per year for the next 4 to 5 years for these college expenses.

DIVIDENDS MEDIATION

2OLDER Brother (or Sister)

You and your younger brother (or sister) are co-owners of ICMP Company Inc., a family-owned corporation that makes small electrical equipment. The company was started by your father. When he died, he left 50 percent of the company to you and 50 percent to your brother (or sister). You and your brother (or sister) are the only members of the company's board of directors. You run the day-to-day operations of the company. Your brother (or sister) only gets involved at the annual shareholder's board of directors meeting. Things have gone well for the last five years with your brother (or sister) accepting all of your management decisions. You receive a good salary for running the company.

Your brother (or sister) has not had any reason to complain about the management.

At the annual board of director's meeting you suggested that all dividends be paid to you and your brother (or sister) again. However, your younger brother (or sister) wants all the profits be paid to you and your brother (sister). Until now you and your brother (or sister) have had an excellent relationship, but because of your conflict on this issue, your relationship has become very difficult. All your efforts to reason with your brother (or sister) have failed. You are now willing to try mediation.

ONLY REVEAL THE FOLLOWING INFORMATION IN THE PRIVATE MEETING (CAUCUS) AND ONLY IF THE MEDIATOR ASKS APPROPRIATE QUESTIONS. In the past, you have used your share of the dividends to either invest, save, or for personal expenses (you bought a boat 2 years ago). This year you want to reinvest in ICMP. ICMP company has 5 older manufacturing machines. You want to buy new machines to replace these older ones. You want to replace all 5 machines (at $20,000 each) this year before the prices of new machines increase.

Created by Dan Hercl of Ohio State. Modified by John Barkai1996