Michael Dell, one of the world’s richest men, decided to cut bonuses for most of the people at the PC firm who would have been candidates to get them for 2006. Many will get better raises for the upcoming year.
What a foolish move.
For starters, most of the people who will not get bonuses could hardly be held responsible for the company’s poor performance in 2006. That distinction would be at the feet of Mr. Dell himself, his hand-picked CEO Kevin Rollin, and a handful of other senior managers. To a large extent, by defending Rollins and keeping him in his job too long (Investors should assume that Mr. Rolling will get his bonus for 2006 and much more in his severance), Michael Dell did nothing to help the firm he started while it lost share to companies like Hewlett-Packard (HPQ).
The memo is filled with other silly comments like "We will have clear priorities and a focused strategy". As Chairman and the company’s founder, Wall St. has to wonder how he let that critical part of corporate management go off track for so long.
So, we have Michel Dell, who in fiscal 2006 made a base salary of $950,000 and a bonus of $1.8 million, telling his employees that they will get no bonuses. This is the same Michael Dell who owned over 216 million Dell shares as of the last company proxy.
Please, please make my shares worth more. Take no bonus. But trust me. I’ll make it up to you later.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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