[Fwd: Kudos and questions]

[Jeff Bone]

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And here I thought we'd taken this offline.  Fair enough.  My
responses...

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Date: Thu, 01 Nov 2001 23:52:24 -0600
From: Jeff Bone <jbone@jump.net>
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To: ThosStew@aol.com
Subject: Re: Kudos and questions
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ThosStew@aol.com wrote:

> thanks for a nice note. do get off your knees.

Please.  You'll have to do a lot more to deserve that.

;-)

> After my
> piece and several other puiblic criticism of his option pacages in those
> years wer published, Dell stgarted behaving much more sensibly with regard to
> his compensation.

There's that market effect at work.  Neat, huh?

> earlier you raised the straw man of a 100% sole propreitorship,  then said it
> was reelvant. it;s not.

It was an illustration, but I'm going to give on trying to connect the dots for
you.  It's a pretty weak illustration anyway.

> the's
> the price you pay: If you solicit my money, you're not allowed to screw me.

Clearly.  Cf. comments about puppet boards, etc.  You don't get that with a 14%
stake, though.

> Dell owned  a volatile
> asset, a bird in the hand. He chose to sell his bird for today's price. At
> the same time, he arranged, through his compensation committee, to be given,
> at aboslutely no cost to himself, the right to about 1.5 birds for every bird
> he sold, which he could buy at any time over the next ten years, and at the
> same price as the price at which he sold his birds. He got to pocket today's
> price--thus guaranteeing him against loss--while at the same time, at no risk
> whatsoever, recieving the right to 150% of any  gain foregone because he
> didn't keep that bird in hand. And the whole thing was paid for by people who
> did not have the same chance themselves.

Right, right.  Fine.  I still think you are looking at this in a fairly screwy
way, but whatever.  Even so --- so what?  Those people *AGREED* to this in order
to continue receiving his services, which they perceived as having a
more-than-compensatory effect on continuing share value growth.  It's a
consensual matter.  There's no room for discussion of "right and wrong,"
"appropriate and inappropriate," etc.

> Oh, it was all perfectly legal. But you yourself have often argued that the
> fact that something is legal (such as certain forms of taxation to which yo
> uobject) doessn't make it right. The wrongness of this was pretty evident--as
> Dell himself seems to have recognized.

What he recognized, I would say, wasn't a matter of "right and wrong" but rather
a matter of "look at what the pot-stirrers are causing, this is more grief than I
need."  You shouldn't've stopped there.  Maybe you could drum up support to force
him to take *no compensation* at all -- or indeed, how about paying *the company*
for the privilege of being its CEO?  I'm sure that would get a top exec good and
fired up.

> One can make the argument--I do in my my new book the Wealth of
> Organizastions, which will be out in december/january--that stock options are
> a form of compensation that's more apprpriate to old-line industrial
> companies than it is to knowledge-based firms--for the latter, compsenation
> in the form of stock itself, rather than options, is actually  more
> appropriate--but that's a radicalish idea that I'm not presenting or relying
> on herel.

Wow, okay, well...  I'll read that book, Tom, but I have to tell you that I think
this pretty much writes you off as a nutcase in my own estimation, no matter how
many articles, books, awards, fellowships, and what not you have.  I engage in
nuttery on FoRK as an amusing passtime;  please tell me you are simply using the
paper press in a similar manner. ;-)

I'll keep an open mind, and I'll read your book...  but what a freakin' nutty
idea.  Let me tell you as an entrepreneur in knowledge-based industries that if
the options go away, I go away.  And I suspect that's pretty representative of
the attitudes of most of the early-stage folks I know.  Perhaps, Tom, you would
achieve a certain degree of enlightenment by taking a sabbatical from the pundit
business and actually walking the entrepreneurial road for a while, from kitchen
table to woodgrain panel grubby startup offices to B-class offices to
institutional funding to liquidity.

> what Dell board board did was, plain and simple, self-dealing, with
> public shareholders' money, and in my considered opinion  contravened their
> fiduciary responsibility.

But what about the considered opinion of the shareholders?  If they did indeed
self-deal, and violated their fiduciary responsibility, there are both corporate
and external legal mechanisms for correcting the problem.

But explain:  how was it self-dealing, exactly.

> as for being busybodies: that's my job. someobody has to do it

At least you own it.

:-)

> As i said; Enough. I have two deadlines and can't write more pro bono at this
> time--besides, I have written often enough on this subject and  have to get
> ready to entertain Geege when she comes up for the Leadership in Turbulent
> Times conference next week.

Whatever.

jb



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