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Technology Stocks : Network Appliance -- Ignore unavailable to you. Want to Upgrade?

To: H.A.M. who wrote (1635)	11/17/1999 12:28:00 AM
From: H.A.M.	Respond to of 10934

Excerpts from an interesting article in The Wall Street Journal of Wednesday (11/17/1999): Daniel and Charmaine Warmenhoven, for example, recently spent two days cloistered with a team of advisers at the Inn at Spanish Bay in Pebble Beach, Calif., hammering out an elaborate incentive arrangement. The couple, who met at Princeton University and married after graduation 26 years ago, raised two children while Mr. Warmenhoven moved up in the high-tech field. Today, largely due to the huge run-up in the stock of the company Mr. Warmenhoven now heads, Network Appliance Inc., the Warmenhovens are worth more than $200 million. "We don't want the money to be a burden or a negative influence," Mr. Warmenhoven says. "We want to provide a positive structure with incentives for the children to make the most of their lives." So the Warmenhovens, who are 48 years old and live in the San Francisco area, met with attorney and certified public accountant Robert A. Goldman, whose clients typically have net worth exceeding $30 million. Mr. Goldman played something of a psychologist, asking the couple to imagine what they would tell their unborn grandchildren about what mattered most to them. "Money shouldn't be your goal," Mrs. Warmenhoven said. "We were happy before we had money. And happiness shouldn't be your goal -- it's the byproduct of a goal-oriented, full life." The attorney told them, "This language can be incorporated in your trust so it's passed down in future generations. They won't just know Grandpa was some guy who got rich with computers." Mr. Warmenhoven, who believes his two teenage children are "well grounded," responded immediately. "This is a big issue to me. I've not yet met my grandchildren, but I'm concerned about how they will be raised with wealth in the family." And so, Warmenhoven descendants will have trusts with an on-off faucet for distributions based on their adherence to family philosophies. For instance, if an heir isn't "doing something to the best of his or her ability," funds won't be readily available. "Whatever you choose, be the best you can be," is one of Mr. Warmenhoven's trust requirements. However, to prevent an independent trustee from arbitrarily deciding whether the heir measures up, the Warmenhovens are putting in criteria such as business achievement, academic excellence or social contribution. A family limited partnership will allow the children to learn how to manage investments, and a family foundation will require them to participate in charitable giving. "I want it to be kind of like the Kennedys or Packards -- a structure is in place with a certain set of expectations from the family," Mr. Warmenhoven says. To increase the odds of family gatherings, the couple added a special incentive -- ownership ultimately by the children of two stunning beachfront compounds in Carmel, Calif., and Maui, Hawaii. "I want them to be kid magnets," Mr. Warmenhoven says. As incentives to get the children active in making their own business plans, they are setting up a procedure under which the partnership will finance ventures "if at least 20% of the money comes from the outside," the CEO says. But Mrs. Warmenhoven, who works part time at the Catholic Diocese of San Jose, Calif., doesn't want money to be given only if they are making money. "They could be a missionary," she says. So Mr. Goldman drafts language so "the incentive is to demonstrate you're a productive member of the family, for oneself or for others." The children's interests in the family partnership also aren't assignable or transferable. "It's a pre-prenup," the CEO says. "It's like we set up the prenuptial agreement before their selections of mates."