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To: Mick Mørmøny who wrote (99147)	2/14/1999 2:33:00 PM
From: Chuzzlewit	Respond to of 176387

Good morning! An interesting article, but once again, replete with unstated assumptions. In order for a chief executive to own significant amounts of stock, he must either be wealthy to begin with or he must have generated his wealth while in the employ of one of those rapidly growing companies. Let's not talk about the independently wealthy executive. I think that even the most ardent Calvinist among us would not consider an executive's personal wealth to be germane to the hiring decision. But that really is just a small jump to the issue of how an executive achieved his stock ownership position to begin with. I think the answer is probably stock options. [Remember, the study is for the period 1993-1997; not from the time the executive was hired.] So the first hidden assumption is now obvious: the chicken and the egg problem. Or to put it another way, causality. Most growth companies reward top executives with bonuses (in the form of stock options) which are generally based on executive performance. But executive performance is based on bottom-line performance. Problem 2: the most generous option packages are found in smaller, startup companies. If they are unable to deliver the bottom line, then the value of the options package is worthless, but if they are, then the value of the package is worth a great deal. In other words, the success of the company is like a sieve, and only the successful company will have the well-compensated executive. Don't get me wrong, I am all for executives owning significant amounts of stock in the companies they manage. But I think that it is important that the stock be restricted. Perhaps if they were allowed to sell stock at only one or two specified times of the year, and never more than a certain percentage of their holdings. Just some general thoughts, TTFN, CTC