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

To: rudedog who wrote (114208)	4/4/1999 11:01:00 PM
From: Meathead	Read Replies (1) \| Respond to of 176387

Agreed Rude. Most were not in it for the money to begin with... a very common thread. There has been much discussion regarding how to appropriately compensate thru performance driven stock options. To my knowledge, most companies reward employees with options as a result of excellent performance or as incentive to climb aboard, yet future performance has no effect on the grant, only time. However, this in turn motivates those who have not received a sizable grant so net net, the cycle continues and ultimately the corporation recieves the benefit of superior performance in one form or another... or until your stock begins behaving like AMD's has throughout the 90's. Performers usually get compensated with options. So the question becomes how to guarantee future performance for companies with amazing stock runs like DELL. Merit increases, promotions and $$ bonuses are tied to yearly performance appraisals which usually contain specific objectives. However for those in the fortunate situation of seeing their net worth increase by $700,000 in a year via ESOP's, an extra $10k-$80k reward in salary etc. hardly seems worth the effort. It would be relatively easy to treat options in a similar fashion. If you vest 20%/year, your appraisal or other milestones could act as a modifier to the base percentage. As an example, for above average to superior performance, the individual receives the full 20%, fair to average 5% to 15% and poor < 5%. That would be powerful incentive. In the case of your CPQ acquaintance, that $40k/month $480k/year vesting now becomes jeopardized for a slacker. Only getting half means forfeiting a cool quarter million. Few individuals would let that go without a fight. One of the unfortunate side effects of this approach is that it puts the reviewing manager in a precarious position. Imagine telling your employee that your opinion of him/her will cost them hundreds of thousands. Sometimes, the manager does not even know about an employee's options as they may have been granted under a previous regime. To keep things in perspective however, the vast majority of high-tech stock options only enhance a persons income... not make them filthy rich. Only a percentage of employees at a handful of technology firms like MSFT, DELL, INTC, CSCO etc, have essentially won the lottery. As for executive compensation... that adheres to a different dynamic altogether. MEATHEAD