How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 476.18

+0.3%

3:59 PM EST

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To: jonkai who wrote (71384)	7/19/2002 4:25:50 PM
From: David R	Read Replies (1) of 74651

The problem with ESO's is only with the top-management where the number of shares granted is so large. For the rank-and-file, ESO's provide one of the strongest incentives to work 60+ hour work-weeks. The core issue is that the system currently encourages execs to dump when the share price is unsustainably high. Recently, many executives are short-term investors in their own company (dumping all shares at the earliest possible time), and they do not consider the long-term investors who own the company. I do not think that expensing ESO will address this core issue, since execs can/will still dump shares to make the most money. What we need are regulations preventing executives from dumping shares. Insider shareholders with more than a very small percentage of stock, should only be able to sell on a strict schedule (say max 20% of vested shares per-year). Furthermore, execs company loans to execs using shares as collateral should be prohibited (since execs use this mechanism to sell shares without reporting the sale for 12 months). Golden parachutes should be limited, and should exclude any stock deals (i.e company buyback). Execs should be required to sell shares only into the open market (never to the company). If an exec must take a 5 year view of the company in order to maximise personal gain, then their interests will be aligned with shareholders.

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