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To: Road Walker who wrote (172723)	1/30/2003 8:45:08 PM
From: Eric K.	Read Replies (1) \| Respond to of 186894

John-- Re: I don't mind these folks getting rich if they perform, it's the getting filthy rich that bothers me. Is it really a problem of CEOs getting filthy rich, or of CEOs getting filthy rich regardless of their performance? I think it would be interesting to look at non-founder CEOs of Fortune 500 companies (so that the Gates/Ellison/Buffett/etc. effect didn't skew things) and look at the correlation between executive compensation and stock performance over a CEO's entire tenure at a firm. I have a feeling that, once you're CEO of a major company, there is very little correlation between how well you run your company and how much you get paid, which isn't that surprising given the whole structure of corporate governance and the general lack of shareholder influence on compensation. Why would the compensation committee of a board of directors-- which is basically a bunch of current and former CEOs of other companies, each of whom has his/her own interest in maintaining high CEO salaries, choose to lower the salary of one of his amigos for financial underperformance? -Eric

To: Road Walker who wrote (172723)	1/31/2003 12:32:24 PM
From: Robert O	Respond to of 186894

John, thanks for reply although nothing in my post insists these be short-term options. Indeed, a longer time frame allows for longer time periods to go after rel. overly risky projects. Most senior managers getting any of the real option deals (size wise) are probably going to be there 5 years anyway. Building a career at the likes of say Intel isn't the type of thing that requires these HUGE incentives vis-à-vis a smaller tech start up that, in order to pull away talent from more established firms, can only do it with outrageous option packages that might hit big if the firm is the next, say, Adaptec (before they floundered!). The problem with one year option vesting periods is that it is much harder to peel away what portion of the return on the common shares was due to performance and what part due to general market conditions. So five years helps flatten those external factors, though not fully of course. I'm with you on the last sentiment. My premise, for well established large tech firms where ONE person is VERY unlikely to be able to have the same effect as the founders (let's be real look at existing market cap.) there is no need to give so much out of shareholders pockets into a few. Someone can do the math but even a rel. bland performance over many years will still reward these folks RICHLY. Meanwhile Joe shareholder could have done better in numismatics! RO