Expensing options gains steam.Michael Dell Michael Saul Dell (born February 23, 1965, in Houston, Texas) is the founder and CEO of Dell, Inc. Biography Early life and education The son of an orthodontist, Dell was born in to an upper-class Jewish family and attended Herod Elementary School in Houston, is slashing the number of options issued to his employees by half. The main reason Dell Computer has decided it will no longer be as generous with its stock is simple: It no longer has to be. Employees in the troubled computer industry are eager to work for Dell, a financially strong survivor. Dell is convinced it can attract and retain employees with other types of performance-based compensation, such as cash bonuses. "The industry is totally different than two years ago," says Michael Maher Michael Maher (born 1930 in Holycross, County Tipperary), is a former Irish sportsperson. He played hurling with his local Holycross-Ballycahill club and was a member of the Tipperary senior inter-county team from 1956 until 1966. , a Dell spokesman. "That's the main reason for us to use fewer options." Dell's decision is particularly sobering to Rick White, a former congressman from Washington State who heads TechNet, a coalition of 200 chief executives of technology companies. Many leading blue chips and large financial firms have decided to treat options as an expense on their balance sheets, building pressure on the tech sector to follow suit. White's goal is to stop the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). from requiring that. Yet there is a 90 percent chance that mandatory expensing of employee stock options will start as early as mid-2004, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a recent report by UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Warburg. White believes that Michael Dell is awarding fewer stock options because he knows the company will probably have to expense them next year. "No company will award options because it will get penalized pe·nal·ize tr.v. pe·nal·ized, pe·nal·iz·ing, pe·nal·iz·es 1. To subject to a penalty, especially for infringement of a law or official regulation. See Synonyms at punish. 2. on their income statement," says White. "It proves, guys, if we continue down this road, we will have tech companies moving away from employee ownership." Another sign that tech companies may be losing the expensing battle came from Intel. A hefty 47.6 percent of Intel shareholders voted for a proposal urging Intel to expense options. It was a thin margin of victory for Intel management, which staged a massive blitz to voice their opposition to expensing stock options, even distributing a 56-page addendum addendum n. an addition to a completed written document. Most commonly this is a proposed change or explanation (such as a list of goods to be included) in a contract, or some point that has been subject of negotiation after the contract was originally proposed by to the proxy they sent to their 200 largest shareholders. To date, only four out of a total of 275 tech companies have announced they will expense options, according to Bear, Stearns. The companies are Computer Associates, USA Interactive, Expedia and eGames. Judging by Dell's decision and the close call at Intel, it may be only a matter of time before the entire tech sector will have to jump on the expensing bandwagon. |
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