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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Chuzzlewit who wrote (103050)	2/19/1999 2:47:00 PM
From: my2boys	Read Replies (1) \| Respond to of 176387

<<<I have been saying for some time that it is a shareholder rip off because it shifts the costs of executive salaries from the company to the shareholders.>> Are not all costs to the company effectively shifted to the shareholders by virtue of the effect on stock value? How is this different from the use of stock options to pay salaries?

To: Chuzzlewit who wrote (103050)	2/19/1999 8:46:00 PM
From: PAL	Read Replies (1) \| Respond to of 176387

Paul, the beauty of having a dialog with you make us think logically and academically instead of having to response based on emotion and bias towards a certain issue. I agree with you about stock repurchase which is better than dividend. As you recall, I call it a virtual dividend (forget about 100% stock dividend to be issued next month, that is completely different). Besides your excellent points of having tax considerations, I added that dividend is a handcuff to management in using cash flow. The amount of dividend will thus become a floor that has to be met every quarter. Lowering the amount of dividend to meet certain objective will undoubtedly met with negative reaction from Wall Street. You mentioned that cash that cannot be invested profitably ought to be returned to shareholders in the form of dividends (residual dividend policy). This happens very rarely, and usually arises from a one time special transaction, such as the sale of a division for cash. Such huge amount of cash is then given to shareholders in the form of special distribution. I do not recall that in the normal business operations there would be any excess cash that cannot be invested profitably. Even T-Bill provides some interest income. The timing of stockbacks should not be predicated to share price. I agree completely. Who is to say that the price is now cheap or expensive? I have to point out that MSFT every quarter will issue a gloomy outlook for the next quarter since they don't want to buy back stocks at higher price, yet they keep buying back for employee stock options. Stock options: I have not taken a stand on this issue. I have not hit the books since my academic days, both as a student or as a professor. Those days we did not have that issue, so the books that I was familiar with never touched on the subject. From what I have seen, this is an area that can either be abused or if applied correctly, is a powerful motivation to employees. The number of shares has to be approved by shareholders in the annual meeting, but I agree with MB (gasp!) that many times common shareholders votes are meaningless since managament controls the majority shares. Look at Michael Eisner with hundreds of millions bonus, yet the lower level of Disney people work for minimum wage. On the other hand if you go to Home Depot, anybody with an apron is a shareholder. So that friendly customer service might be a millionaire. Compounding the problem of stock option is what is the worth of an executive? If Bill Gates is paid $ 100M/year, is that a fair compensation. Should it be in the form of cash, or is it better for MSFT to pay him in stock options. Considering the billions and billions of MSFT shares outstanding, is that better than draining that cash? Is this fooling shareholder? There is no standard of what is fair. The most powerful man in the world is paid $ 200,000/year and no increase for over 30 years if my memory serves me right. Then there is a kid who can throw football 60 yards away who gets $ 40 M for a few years. I did challenge MB to show me where Dell has abused the stock option. He only said: look at 10K. I consider that as a non-answer. Good having a dialog with you. Paul.