Kis, if it wasn't for the huge amount of money Dell makes on its investment income I'd short the stock.
These days I think of Dell more as a investment banker...than a pc or server maker.
>Round Rock, Texas, May 30 (Bloomberg) -- Dell Computer Corp. founder and Chief Executive Michael Dell's pay tumbled 85 percent to $16.6 million as the No. 1 direct seller of personal computers wrestled with its worst performance in six years.
Michael Dell's total compensation for the fiscal year that ended Jan. 28 fell from almost $109 million a year earlier. The bulk of the decline came from fewer stock options. Dell, 35, who ranked fifth on the Forbes magazine list of wealthiest Americans for 1999, got options valued at about $14 million last year, down from more than $105 million for the previous year.
Dell's salary rose less than 1 percent, to $850,000 from $844,231. His annual bonus, which is tied to the company's performance, fell to $1.67 million from $2.62 million.
``It's great when management is more tied to the fate of shareholders,'' said Tim Ghriskey, a senior portfolio manager for Dreyfus Corp., which owns about 4.7 million Dell shares.
Dell Computer's shares tumbled 21 percent during its last fiscal year, the worst performance since the year ended in January 1994, when the shares slid 54 percent. The Round Rock, Texas-based company's stock has fallen 14 percent so far this year. The shares rose 1 5/8 to 44 today.
``We fell short of our own goals,'' Dell spokesman T.R. Reid said.
Last year's options award was higher because it was the final installment in a multiyear grant that Michael Dell received from the company's board beginning in 1996, Reid said. Before that year, he didn't receive any options.
Options Grant
As a result, this year's options grant ``is the product of the more standard criteria'' that the company's board uses in awarded options, Reid said.
Michael Dell's pay was outlined in a proxy statement filed with the U.S. Securities and Exchange Commission.
Last year, Dell's wealth ranked him behind Microsoft Corp. Chairman Bill Gates, co-founder Paul Allen, Berkshire Hathaway Inc. Chairman Warren Buffett and Microsoft President Steven Ballmer, according to Forbes.
Dell's 12.4 percent stake in the company he founded in his college dorm room in 1984 is worth $13.62 billion. His wife and two family trusts control another 46.4 million shares, worth $1.96 billion.
The decline in Dell Computer's shares comes as sales growth slowed. Executives warned investors that sales probably will rise about 30 percent in each quarter this year from the year-earlier quarters. From 1996 through 1998, when Dell was the best- performing stock on the Standard & Poor's 500 Index, sales rose 50 percent or more every quarter.
Analysts blame the slower sales growth on the company's size, with annual sales topping $25 billion last year. In addition, the company has wrestled during the past year with parts shortages, slower demand for corporate PCs and an end-of-the-year slowdown because of customers' Year 2000 transition concerns.
Server Strategy
The company has stepped up its focus on servers and other machines that run Internet sites in an effort to make up for slower corporate PC sales. Ghriskey said he thinks the strategy will be successful, although the stock will suffer until the transition is complete.
``Shareholders are having to pay the price in the short term, so management should too,'' he said.
While Michael Dell received fewer options than in past years, he profited from earlier grants. He exercised options on 5 million shares during the past fiscal year, generating a profit of $233.3 million, according to the proxy.
Vice Chairman
Former Vice Chairman Mort Topfer, who stepped down late last year and serves as an adviser to Michael Dell, exercised options on more than 4 million shares, making a profit of $154.8 million. Vice Chairman Kevin Rollins raised $64.4 million after exercising options on 1.55 million shares.
Vice Chairman James Vanderslice, who joined Dell in December from International Business Machines Corp. to replace Topfer, received $37.6 million in restricted stock and options on an additional 1.5 million shares that the company valued at $24.2 million.
Michael Dell received options to buy 805,595 shares of his company's stock at $44.69 each.
Dell Computer's estimate of the value of options is based on its own calculations, which may differ from those of other companies because there isn't a standard formula.
Also, the SEC allows companies to provide present value or estimates of executives' potential profits from options, known as realizable value, in proxy statements. As a result, compensation figures aren't comparable from one company to another or even within the same industry.
In Dell's case, the company estimates the options' value on the day the board issues them. The company's formula, though, reduces the estimated worth by 25 percent to reflect the chance that employees might leave the company before the options vest.
Because Dell isn't likely to leave, the actual value of his options grant is probably higher.
He owned 321.5 million shares at the end of last month, including options that will vest within 60 days.
May/30/2000 16:41 ET |
