Hi Brian, RE: " As it now stands, Barrett is profiting handsomely while **most** shareholders are suffering."
Well, it's not exactly a confident-inspiring move to sell stock at such a bad time, but Yahoo shows his sales seem to happen every January, so it's hard to gripe about someone who is at least consistent in the month they sell their shares.
RE: "I merely believe that the people at the top get too much, and always have, even before the 3 year slump."
I tend to agree with that - the issue is accumulated total, which is different than the other point made about one grant of 31,250 options.
But I think Intel stopped issuing new options to their top-most executives.
Other large, public, successful high-tech companies should follow suit, where the top-most execs already have a huge portion that translates into substantial money. I think one Brian K or John Fowler's of the world should reside on industry comp committees, so representation is inclusive. Is there an average c/s shareholder on comp committees? Or the average engineer? In high-tech, I think the representation may have the potential to get tilted towards the executive because (I believe, though am not sure?) comp committees seem to usually consist of executives, high-level investors and an HR executive?
But on the opposite spectrum, you have United Airlines that went bankrupt essentially because the Union had control of the board and paid the people they represented better than any other airlines did. That didn't do anyone any good.
Do the very top execs at companies need more? I would bet many of them would think not, but some may feel they "need it" purely from the standpoint of recognition, possibly relative to peers. I think the best way to solve that problem would be if a comp committee simply said, "the absolute best executives of this company aren't going to get new options." But some comp committees don't have the insight to understand that some execs ask, not because they want or need more money, but because they want some kind of recognition from their comp committees. Then, there's Lee Iacocca, Jack Welsh's of the world . . . (comp committees shouldn't cave in to those folks).
If you look at a graph of options in the USA (starting late 70's thru 80s and extending into mid-90s), I think the person who started all of this was Lee Iacocca (though many would say, it started with Congress' efforts to curb exec comp). Anyway, I think it started with his huge options that he received and grew on the backs of State taxpayers that he made certain promises that many people feel he didn't deliver on. (Side note, I once used an adjective to describe him to a business colleague that eventually became a friend of mine, who surprised me at the time by replying with, "he's my relative, a second cousin." I apologized for the adjective (but not the content), and she laughed and said, "don't worry. do you know him?") But Iacocca was the smartest of the auto bunch and drove excellent change. Those before him seriously hurt the industry. MBA schools will correctly rave about him because he turned the auto industry around with his absolutely incredible leadership skills that were at the time considered innovative (though standard fair at high-tech software firms), but MBA schools neglected to discuss the glaring hole he also initiated in the area of stock options at the top-most.
While we're on the topic, my Dad worked in the auto industry. My Dad never criticized certain auto execs that predated Iacocca, but as a kid I certainly criticized some of them for not doing what was obvious to even an 8-year old kid. I remember getting annoyed at my Dad as a kid for not suggesting change. (I don't know how anyone could work at a company and passively watch/allow people to head in the wrong direction.) I wouldn't have held back my opinion. People back then didn't speak up or drive change. That industry blew up so bad, a lot worse than this downturn in my opinion, and I saw quite a few people die in the auto industry community due to the medical ailments that ensued due to stressfulness inflicted by the industry's errors in business judgment. It was a painful time for every person in the auto industry due to huge errors in business judgment by quite a few auto execs. Some other corporations were even stealing people's pension funds back then too (they didn't have 401ks.) So, years later when I graduated from school, I searched to join a company where one could trust the CEO's sound business judgment, someone who was smart, wise, self-critical, had vision, and was intensely focused on the products side, and who was open to feedback and letting people "run with it" to make change. All those things that the auto industry didn't have many years ago (they do now). I joined what was a relatively unknown company at the time, Microsoft, because of those things it had, the CEO (Bill Gates) was smart, had solid business judgment, vision and I felt I could trust my financial well-being to. Given my childhood background, I don't trust that many companies or executives when it comes to vision or financial well-being and am very picky as a result, but the experience sensitized me to figuring out which companies to trust.
You implied that Gates didn't have vision regarding the Internet. You didn't work at Microsoft, so wouldn't be aware of unpublished Internet vision around 1991. Microsoft certainly has vision, but it would be fair to say sometimes Microsoft can get caught up in too much wide-scale perfectionism on some creations, and sometimes there's last minute hustling for alternative solutions as a result. And sometimes Microsoft needs to get more aggressive at cutting things off at the pass early enough, such as cannibalizing equally as good as Intel does (e.g. Linux is gaining fast share in small business sector). But to say Gates doesn't have vision, is essentially the same as saying that one isn't up on that incredible technical vision he has.
Regarding when high-tech gets out of this mess, my guess is it's less than 2-3 years, so I'm going to disagree with his comment on market timing. He'd be the first person to respect another person's opinion.
If no industry leader predicted the downturn, why would anyone accurately predict the uptick? I think when the Iraq situation clears, the economy will recover. But writing covered calls on some for a short spell is probably a good idea.
It's painful, but it could be worse. There are some countries that experience unemployment rates at the same level as the "Great Depression" every year.
Regards,
Amy J |
