Hi GV,
Oops, you sound mad. Sorry.
I think there's a misunderstanding. I certainly have great respect for your capabilities. I believe you interpreted my comment in a negative way, as if you feel there is something wrong with not being at a highly motivated stock company. Doctors offices are not stock companies - I have two brothers who are doctors - I see absolutely nothing wrong with their occupations.
But because they have never worked at a highly motivated stock company (i.e. their compensation is not through stock), we could go around in circles trying to explain to them why stock incentives are motivating for employees. They certainly understand the value in options, but they haven't connected the dots between cause and effect, not because they aren't smart, but because they haven't experienced the resulting culture of a company whose employees are motivated through stock, so they don't know the value of stock incentives for employees and how that relates to corporate success, because they haven't worked in such an environment.
My impression about WS is that the compensation is heavily cash based as well, but very, very light on the stock options, no different than a doctor's office. Opposite of high-tech. You said you worked in WS. My impresson about WS is that the firms appear to be so heavily focused on cash over options that there seems to be a lack of an understanding around the significance of options as a motivation tool that people who have worked at highly motivated by stock companies have (i.e. whose comp packages are heavy on options but light on cash.) So, if your firm did indeed compensate mainly through cash, rather than options, as I assume it did, then it is logical to suggest that you may not know the value of an option incentive program over a cash incentive. Likewise, I have never worked at a cash-only incentive company, so I may lack insight into the benefits of it. But one thing is for sure, I definitely didn't mean the comment in any negative way towards you.
In high-tech, at least in the Valley, I've observed a trend: the folks that are motivated by cash (rather than options) seemed to all end up at these cash-paying (but few options) firms that turned into dead-weight companies. Even when these companies were doing fine, their total comp package was less because of the options. I started developing a theory that maybe the people at these cash-based-paying companies weren't quite smart enough to figure out the total compensation package was actually lower there, or maybe people who go for the higher cash-based comp packages (that have fewer options) are less motivated because it's too much of a pay-as-you go model which fosters "change of the wind" motivation, as oppose to the option-motivated employees that are in it for years, building value, rather than on a paycheck basis. Excluding Enron-style abuse (that's a different issue), I'm seeing more of the cash-heavy-compensation companies that give out few options are now really, really struggling --- and you could see it coming years before it happened just on the basis of watching the folks they seemed to attract (i.e. less competitive folks), probably due to their cash-heavy comp packages whose upside was limited (which isn't great for highly competitive people), while, in comparison, the better option paying companies tend to do quite well for employees, investors, and the company. Now, this statement is in the context of only high-tech, where there are both kinds of compensation philosophies (cash vs options emphasis) of which the cash-focused comp packages seem to get these companies in trouble. But this is not in the context of other industries, such as the one you worked in, where (I believe) all of the companies have the same cash-heavy but low-option comp type of package, i.e. doctors offices, lawyers, or WS firms. So, absolutely no offense was intended. Just a matter of fact comment that if you haven't worked in an organization that's highly motivated by option compensation (rather than cash-only focus), you may have a hard time seeing why it could be favored. But again, absolutely no offense intended. I have a high regard for you (and the place you worked, which had one of the best funds I recall.) Usually I reread a post before submitting to catch anything that could be misconstrued, but didn't this time. I have to run now, so don't have time to reread this, so hope there's not another blooper. Hope you accept my apology, I sincerely didn't mean any offense.
Regards,
Amy J |
