Dell Computer is cutting the number of stock options it grants to employees, but does not expect to have to offer staff members more cash compensation as a result, Chief Executive Michael Dell said Monday. Dell is not the only company that has cut back on using stock options, and it is that change in the job market that makes it unnecessary to sweeten compensation for employees in other ways, Dell said in an interview with Reuters. The issue is potentially crucial for Dell, a company that is famous for running a leaner cost structure than its competitors and that has also pledged to continue to drive down expenses as a share of sales. "The use of stock options at a lot of companies rose very, very quickly during the whole dot-com era, and now it's coming down," Dell said. "We're reducing ours and others are reducing theirs."
Wednesday, May 21, 2003
Dell not replacing options with cash | CNET News.com
Posted By Allen at 12:06 PM
According to CNET News.com, Dell is going to be reducing the number of stock options given to employees. They say that because the job market has declined it is less important to entice new employees with stock options. While I agree with that statement, I also have to say that this really surprises me. I think it's the stock options that incent high-tech workers to put in 80 hour weeks for long stretches of time. It's the possibility of getting rich that allows these working to continue to perform at such demanding levels. If you take away the stock options, then what is the incentive? I know that for some people just having a job is incentive, but what do you do when the economy heats up again? You can't just expect to jerk people around, and then think they are going to be loyal when a better opportunity comes along. Over the long run, I'm sure the number of stock options are going to come down, but I think that we will also see high-tech jobs come more inline with the traditional workforce. Without stock options, I think companies are going to have a hard time getting people to work nights, weekends, and holidays. That's probably a good thing too. Here's a quote from the article: