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Author: TMFOtter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 214658  
Subject: The Tech Industry Declares Victory!!! Date: 7/12/2002 9:15 PM
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Just received this glowing (steaming pile of) press release from the AeA, a trade association for the high tech industry. I nearly puked. Please feel free to email Taryn and tell her just how happy you are that high tech companies can keep granting 8, 9 & 10% of their share float to insiders. Morons can't even figure out why it is that people are abandoning their companies. Guess the list is just too damn long.

My response to this will go something like this:

Dear Taryn:

My name is Bill Mann, and I am the Senior Editor for Investing at the Motley Fool. We have 2 million monthly visitors to our website, several best selling books and the fastest growing radio show on the history of NPR.

I am also an individual investor, one who has soured considerably over the horrible treatment of outside shareholders by many of your members. This industry's fight against proper stock options accounting is but a part of this, far worse is the sheer abusiveness of those stock options grants among many high tech companies. Your carrying the mantle of the high-tech worker in this regard misses something brutally obvious: there is NO ECONOMIC EFFECT to companies for expensing stock options. Your members fear stock options expensing because they would be unable to hide massive compensation packages. They have threatened to take options away as compensation to the rank and file if they have to expense them. That's revolting. Your workers deserve better than such blackmail.

I intend to use the full reach of my power to make such a "victory" very painful for your members. It may not be much, and you may not be able to fully appreciate the pain in the midst of all of the other pain that the companies in your various industries are suffering. Nonetheless, I do not have any problem telling you that I find the treatment of stock options particularly among many high tech companies to be unconscionable. For example, one of your members, Brocade, granted more than 19% of its total float to insiders in the form of options in 1999. This was a multi-billion dollar company, not a start up.

Shame. Shame on all of you. Perhaps you have not noticed, but there is pressure afoot to make financial statements more opaque and to practice principle-based accounting. Without proper accounting for stock options, financial statements of big grantor companies will still be DRAMATICALLY overstated. I do not plan on missing any occasion to point out to my readership, shareowners all, that your member companies are HIDING the true cost of compensation. The company may not have out of pocket expenses, but the cost to shareholders is significant in the form of dilution and poor capital allocation made in the name of "shareholder value".

My article on Tuesday shall be dedicated to your "victory". In it I will announce the sale of one of your member companies from the Rule Maker, a Motley Fool model portfolio that I have been managing since January. One of the main reasons for the sale is the company's horrible policies on stock options, as well as its horrible overall treatment of shareholders. Enjoy it!

Your member companies have a distinct opportunity to act in the best interest of your shareowners. It is sad so few have chosen to do so, but it is also nothing that your shareholders should have to deal with. We can always sell.

Bill Mann
Senior Editor, investing
The Motley Fool


FOR IMMEDIATE RELEASE
Contact: Taryn Lynds (202) 682-4443, taryn_lynds@aeanet.org

Tech Industry Cheers Defeat of Senator McCain's Assault on Stock Options; Praises Senator Daschle, Senate Republicans

WASHINGTON, DC --July 12, 2002 -- AeA, the nation's largest high-tech trade association, praises Senate Majority Leader Thomas Daschle (D-SD) for spearheaded yesterday's defeat of Senator McCain's (R-AZ) efforts to force companies to expense stock options on corporate balance sheets.

"Leader Daschle and Majority Whip Harry Reid stood up for American workers and set the right tone for the debate. Their leadership was crucial during the Senate's deliberations," said John Palafoutas, AeA senior vice president for domestic policy. "Senate Republicans, led by Senator John Enzi of Wyoming, provided critical opposition to Senator McCain's amendment. We appreciate this important bipartisan effort in support of high-tech workers."

Advancing the business of technology, AeA is the nation's largest high-tech trade association. AeA represents more than 3,500 member companies that span the high-technology spectrum, from software, semiconductors and computers to Internet technology, advanced electronics and telecommunications systems and services. With 18 regional U.S. councils and offices in Brussels and Beijing, AeA offers a unique global policy grassroots capability and a wide portfolio of
valuable business services and products for the high-tech industry. AeA has been the accepted voice of the U.S. technology community since 1943. For more information, please visit www.aeanet.org.

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