Someone (sorry can't remember who) recently said
that in CF's
recent conference call she mentioned
an aggressive share buyback.
Does anyone have
any more details? I have mixed feelings about
such a plan. On a historic level, HWP's valuation is
on the high
side and it may be more prudent to
plug excess funds back into
the business in order
to support and hopefully increase the
The only time an "aggressive" buyback is essential is
when the share price is relatively very low.
Agreed! I'm definitely NOT against employees
sharing in the success they generate (I have options
granted to me too). I'm interested that companies stick
to making things and selling them. They should NOT
be playing at Stockbroker. Or worse, employing
tactics to artificially support their own stock price by
trading in their own shares.
[In an auction, this
would be called "ringing" and is illegal, here at
I do think that the solution is that all stock
options should be NEW issued shares. Bought off by
shareholders at the AGM for that specific purpose, with them
fully cognicent of the dilutive effect it will have.
For a successful company, that's not a problem -
especially if shareholders can see the benefit of the "perk"
to their workforce.
If the number of shares
issued becomes too high via such dilution, they can
redeem by a "3 for 4" reverse split, or whatever ratio
Any company going to the Market and
buying its stock is only going to do it when they feel
it's at a low price. There is no obligation for them
to state (in real time) that the demand was
"internal". Declarations are currently made only months
This is inequitable, representing an unquantifiable
downside risk to shareholders.
Stay lucky, good
But she's NOT giving any back to the
>>Not yet, but it Carly is right, everyone will
benefit. That is why we pay $90M to her to increase
shareholder values. So why not so the same for HWP's top
performers as well.
If the shares aren't retired from
circulation, the money the employees get comes DIRECTLY from
the owners of the Company.
>>That is true,
but that goes with employee salary and benefits.
There needs to be a balance right? Shareholders do not
expect everything for nothing right?
issue new shares, voted in by the shareholders at the
AGM. (I think HWP do the same?)
>>I am sure
the board & shareholders will have a voice
Problem with any such scheme is that employees
(especially highest paid, with LARGE option awards) get used
to thinking that the value of those options is just
"magicked" up. It isn't.
>>That is absolutely a
problem and that was why I brought up Cisco's plan that
70% to 80% of the options go to non-managers who
usually got the biggest salary & bonus.
It is an
investment in THEM, by their Company' shareholders.
regard option-derived share sales of $Millions by senior
employees as a statement of their lack of confidence in the
Company. Annual sales from these people are an obscene
multiple of any realistic annual salary expectation. They
almost never buy back when the share price is
low....just try to sell as many as they can when they think
it's high. They don't care one jot for their
>>No doubt JJ agreed with you. I do as well. That was
why I admired the hippie Steve Jobs who got 1 share
to have the previlege to work 100 hrs a week at
Apple. Poor Carly should have done the same just to have
the chance to be HWP's CEO while breaking ground as
the top female executive (business) of the
that you told me the somewhat social system at UK.
Here, it is becoming more and more "Me first" system.
It is the reality that I must face, like it or not.
I'm a big believer in employees owning stock in
their Company. The longer they stay, the more they can
share in the success of their company. But sensible
Donating stock to employees is plain,
simple, extra remuneration. The stock has latent value
when awarded, and real value when
Stock options should ALWAYS be from new issue shares,
so that shareholders can see the dilution effect -
and balance it with the performance and growth of
The shareholders share of the company
is gradually diluted. Yes. But they can see very
easily if the dilution is outweighed by
They can also see if the per-employee free issue is
equitable and likely to yield a good result.
With Big Stock Option Awards:
It's like pyramid
selling......everything is OK while growth is high. The price paid is
always "tomorrow", via dilution.
But what happens
when there are 100M shares issued, but over the next 5
years, there are 10M shares due to be excercised? New
shares? And business is tough.
The company will start
a downward spiral. Option holders sell at the first
opportunity, investors follow. Then everyone realises that the
stock price thought "fair" was a figment of the
imagination. Everyone involved had been doing everything
possible to keep the "old" price up. Including the company
itself spending large chunks of shareholder cash to
create a false impression of demand for the
Stock option obligations are a hidden, MAJOR downside
to the real value of many companies. They must be
kept to sensible proportions, equitable across the
whole workforce, and closely monitored by all. On no
account should a company EVER be allowed to deal in its
own shares! If they want to increase per-share
valuation, all that's required is a 3 for 4 reverse split,
for example. Or pay a DIVIDEND!!!!!
so, Carly is saying to the stockholders that she
is going to spend $X Billion of THEIR assets, and
just give it away?
OK, she's going to give it to
But she's NOT giving any back to
If the shares aren't retired
from circulation, the money the employees get comes
DIRECTLY from the owners of the Company.
I get stock
options too (not HWP though).
My company issue new
shares, voted in by the shareholders at the AGM. (I think
HWP do the same?)
Problem with any such scheme is
that employees (especially highest paid, with LARGE
option awards) get used to thinking that the value of
those options is just "magicked" up. It isn't.
an investment in THEM, by their Company'
I regard option-derived share sales of
$Millions by senior employees as a statement of their lack
of confidence in the Company. Annual sales from
these people are an obscene multiple of any realistic
annual salary expectation. They almost never buy back
when the share price is low....just try to sell as
many as they can when they think it's high. They don't
care one jot for their benefactors.
If you were trying to get help for your company.
You found your man/woman working at ibm or just
graduated from U of New Mexico.
Assume that you have
to compete with me and I am offering 2K options to
sign on (Bill Gates did the same thing when he round
up thousands of programmers to write codes for
Windows). What are you going to do? Do the work yourself?
Get inferior help? Decline the business? Put your
payroll in CDs or invest in my company?
Pages 59 & 61 of the 10/18 BusWeek showed ads for
E60 NetServer and OmniBooks.
realignment, all I saw was e-service ads. It is about time. It
is okay to see 2 pages of E-services Ad on P196 &
Besides the Telecon, Carly will appear
12/1 in San Francisco's "The Digital Economy"
conference. In the flyer, it mentions e-business, e-driven
but not E-services. Wonder if Carly wants us to get
back into the main stream and not trying to fool
anyone with this nonsense of writing the first chapter
Only time will
Also, just caught up with my reading on the most
powerful women in Fortune's 10/25 issue. Interesting
1. Carly chose Lucent's logo ...partly because it
reminded her of her monther's paintings (her mother died
last Dec at 77).
2. Ann Livermore at #13 was quoted
"Everybody wants to write that Ann's pissed off and that she
wants to leave HP," ..."That's not my story. I'm not
going to leave."
3. Carolyn Ticknor (#35), makes HWP
provided 3 of the 50 names on the list.
Lew...trouble with this picture is that all the hype of
diversity are at the top level. In my work group, all
functional mangers are white men. Lew has succeeded to
change the culture at the top. He was unable to inspire
the troops. Hope Carly can do so to earn her $90M
regarding the philosophy of the stock
It looks like Carly will be doing some good things
for us this next week. She's speaking at the Telecom
'99 get together in Geneva. The other speakers will
be Bill Gates and some representatives from IBM,
Sunw, and others. Sounds interesting.
as the rest of you birds. Yes, stock is one of
many parts of compensation and is useful. But, if I am
running a company my objective is to maximize profits and
associated elements. In thus doing, I choose where I can get
the best return for my money. If investing in holding
my own paper is viewed as a good strategy to
accomplish that task then I do so as part of a grander plan,
and I seperate the issue of options, my rewards, and
stock value from sound financial policy. That's it.
Nothing else. I invest the dollars where I do the best
for the company. That is my swarn fiduciary
responsibility. I'm not running a welfare roll or a
Squawk, squawk, squawk, caw JJ
>Buyback statements seek only one thing: to
hype the value of the stock.
Here's some more
thoughts on the matter for you Chap.
The good folks who
work for the company are concerned about the stock
price. They too are owners/shareholders. Part of their
compensation is in company stock via the stock purchase
So unless you take that away and have an entire
company of upset employees, the employees will get stock
periodically. All of them, not just the high flyers. (At least
the one's who participate in the optional program.
So you can give them the stock
they've earned by doing their job by printing more stock.
But then you have a very large amount of stock enter
the float every 3 months, which would dilute the
stock value. Instead you can buy it back on the open
market to distribute at the appropriate times. Voila -
Employees happy and stockholders
happy. Since the company has to buy stock the
responsible thing would be to buy it when the price is
attractive. Carley et al seem to think now is that
This is good since there will be a distribution in