David Wetherell comments regarding questions posed to him about the DSP. January 5, 2000.
On CMGI's Direct Share Program
ragingbull.com
I am no securities law expert, but my understanding is that non-U.S. resident shareholders participating in CMGI's IPO's is not possible. Sorry.
ragingbull.com
The program now allows for up to 500 shares per person, I believe, depending on demand. Since the demand has been so great, no one has been able to get more than 100 shares. It is our goal to provide as many shares as possible through this program, but we need to keep a significant amount available for the institutions, as well. It's amazing to me that some people do not seem to understand that the company can only offer a finite number of shares. Several times I've heard the question, "Why don't you provide everyone who wants 100 shares with the shares?" For those who still wonder that, it's simply because the individual companies going public are only selling so many shares (or put another way, raising a certain amount of money), and shares must be set aside for institutions, as well.
ragingbull.com
This is a program to benefit the smaller investor, especially those that have been loyal to the stock for a long time. Because of the split and the heavy demand in the past for the DSP program, we felt it was best to make it 200. I realize this is a stretch for most just getting into the stock. It certainly does reward the smaller investors who have been in the stock for a longer period. I believe long term loyalty should be rewarded, too. If there was a way to reduce the volatility caused by day-traders with this program, I would do so. Even my stomach has difficulty on occasion, such as today. ;)
ragingbull.com
There are no plans to replace WIT for the DSP. Certainly, the first time we tried the DSP with Engage, there were many problems, some of them with WIT, and we heard about them. The complaints far exceeded the thanks, even though roughly $12mm of shareholder value was created.
We listened hard to the complaints, we met with WIT, decided on ways to improve the service, tried it one more time with NaviSite, and found that the complaints were greatly reduced, while the number of shareholders expressing their appreciation increassed dramatically.
This program is alot of work, and we are reviewing whether or not it is worth it. Our business is to create as much shareholder value for all shareholders, not just those that are fortunate enough to receive this dividend. Despite how smoothly NaviSite went, and despite how much shareholder value was created for those that did receive shares, we may not continue the program after ALTA, because of the dissatisfaction created for some of those that do not receive shares. They create a tremendous amount of work for Investor Relations.
For those of you who did not receive any shares, let me say I am sorry, especially if you have been long term shareholders. The good news for the long term shareholders is that you have been more than handsomely rewarded by the exceptional performance of CMGI. For those of you fortunate enough to receive the shares, I hope the benefit outweighed the difficulty of obtaining the shares. If you still own those shares, I know it has. We will continue to try to improve upon the process. I know WIT is doing the same.
In closing, please realize we are trying to do a good thing that to my knowledge had never been done before. Given the difficulties encountered, I think I know why it's never been done. There really is no financial upside in this for CMGI, but there is the good feeling that comes from knowing we have done a good thing for some smaller investors. Despite the problems encountered, I know there are many out there that have benefited that could really stand to benefit. That's a good thing.
ragingbull.com
All shareholders have an equal opportunity to get DSP shares. If we allocated them in a prorated fashion, as you suggest, the institutions would get 60 percent of the shares and employees would get roughly 20 percent, leaving everyone else to try their best to get the remaining 20 percent. With Engage, I think we only had 600,000 shares to work with in the program. That would leave only 120,000 shares, or enough for 1200 shareholders at 100 shares each. With the way we did it, 6,000 shareholders benefited.
I'm sure the employees did not care, as they also have shares/options. I'm sure the institutions did not care at the end of the day if they did not get their prorata share, since they already get IPO shares. Also, it is my guess they would rather invest in a company that is watching out for the greater good of the greatest number of its shareholders. IMHO.
ragingbull.com
OK, OK. The DSP program will live on forever (unless the board makes me eat my words - unlikely), despite its drawbacks. I am convinced by the overwhelming support on these boards for the program that it is a key asset of our overall strategy. Many thanks for your helpful posts. We will continue to try and make the DSP program better.
ragingbull.com
The first thing Jack Welch (chairman/CEO of GE, of course) said to me when we met was his wife loved the CMGI DSP program, and he thought it was really a neat idea. Though she is not exactly the target, I thought it was great she appreciated it. I guess she has a WIT account. ;) |
