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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (83017)	8/16/2000 3:42:27 AM
From: Mama Bear	Read Replies (1) \| Respond to of 132070

I can't think of anything I'd rather be doing at 3:42 in the morning than trying to understand the arcana of accounting for ESOP's on a publically traded company's balance sheet. -g- Regards, Barb

To: Don Lloyd who wrote (83017)	8/16/2000 4:05:44 AM
From: Bilow	Read Replies (3) \| Respond to of 132070

Hi Don Lloyd; Re the ability of stock options to attract 6 sigma employees... You nailed this one. This is totally true. But it is also possible to get those same people by paying extremely high wages. (I.e. 6 sigma wages.) Probably the real question is just how much do those stock options really cost the company. I would have to submit that you get better employees with cash than with options. There are a lot of good people who will work for either, but there are more who will only work for the high cash than who will only work for the big stock options. Probably the thing to remember is that the technical geek community is actually quite sophisticated with regard to options. We have all earned lots of options at companies that look like a good idea, but which don't pan out. The other thing to note is that engineers, in particular, are almost never well motivated by money. It's more about what cool things you are working on. The challenge is in doing things well enough that they let you do them again. A great read on this is Soul of a New Machine, by Tracy Kidder. And paying engineers with stock options cuts both ways. As long as the company looks like it is going to have a go at it your engineers will stay. But when it becomes clear that the light at the end of the tunnel is a train, they clear out for another deal at another company. If you are paying them in cash instead, this doesn't happen. And yet another problem with paying engineers with options. These programs vest over four or five years typically. If a company happens to go public it frequently happens that engineers will end up with hugely valuable, but unvested options. These guys stick around the company just to get the rest of their options, but they are famous for not doing a lot of work. The idea is just to stay employed, so don't stick your head out. There's a word for the Microsoft employees who are in that position, but I forget what it is. In other words, "golden handcuffs" attach the company to the employee as much as the employee to the company. It is better if engineers are free to go work on the projects that they really want to work on, they work harder that way. -- Carl