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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (120197)	1/22/2014 11:55:07 AM
From: Jim Mullens	2 Recommendations Recommended By Brumar89 lrnin Respond to of 196536

C2, re: Exxon Mobile’s employees compensation. Good info, thanks. Qualcomm is moving in this direction WRT restricted stock grants instituted in FY13 as discussed in their November 2012 and 2013 Analyst Day comments. Last November, both Paul and George Davis discussed employee compensation, including their stock option “bubble”. restricted stock snips for article - + Restricted stock grants. Instead of options on stock, the company rewards executives mostly with restricted stock. These restrictions last for 10 years even in the event of retirement. In my opinion, this is the key component for aligning interest. It makes management share the same experience from company performance that a long-term shareholder would experience. This is critical for a company where capex decisions affect returns a decade or so into the future. It turns all executives into de facto risk managers. This is especially true for the most senior of managers, with the highest amount of restricted stock and closer to retirement. They must ensure that the pipeline of projects receiving funding will support the earnings needed ten or more years from now when they will be able to sell their stock. An additional element, not related to the program but also important to understand the care that goes into aligning interests with shareholders is that company policy does not allow employees to enter into hedging contracts for the stock, or other indirect hedging arrangements through commodities contracts. The resulting executive group is by design a long-term owner of the company, continuously trying to optimize capital use and minimize risks. I think there is a direct link between the incentive packages described here and the track record of being a great steward of shareholder capital. Perhaps another result of XOM management´s conservative attitude and focus on long-term sustainability of earnings is the conservative balance sheet. It has grown without significant use of leverage, making the company one of only four US listed companies with AAA credit ratings; a significant achievement given its exposure to volatile commodity prices.