Options spin...

[joanna bujes]

As anger grows over CEO compensation/looting, beware of spin. For example, 
last week, WSJ ran a brief article on how the fall of the stock market 
upsets the culture of options. In the article, the writers noted, "Boosted 
by outsize grants in the top ranks, Microsoft employees averaged a whopping 
$416,353 in stock-based comepnsation in 2000."

Now, I'm willing to bet most readers go through that sentence without 
giving much attention to the dependent clause and walk away with the idea 
that normal hi-tech employees "average" half a mill in stock options.

This is a mythical average. Here are more real numbers:

75% of all stock options are granted to the top five officers
15% of all stock options are granted to the next 50 officers
10% is distributed among the rest of the employees.

I have worked in hi tech since 1983 and I have never made more than 5% of 
my salary by selling options in any year except during the two-year bubble. 
Sadly, many hi tech employees did not sell their stock during the bubble 
years because they did not know, or would not admit it was a bubble. Many 
of the folks I urged to sell would not because 1) of the tax hit or 2) they 
were in it for the "long run." It never occurred to them that 1) stock 
could lose 95% of its value (it did) or 2) it would never regain those 
bubble heights....even in the very, very long run.

This was a game for insiders all the way, and it's going to be damned hard 
to make it look like anything else.

Joanna