While it may be a foregone conclusion, it is time for Jonathan Schwartz to leave as the CEO of Sun Microsystems (NASDAQ: JAVA). He has done absolutely nothing for the company since taking over from Scott McNealy other than play shell games with your shareholders. The reverse split of the stock and changing the ticker symbol to JAVA had the feel of a carny show.
The acquisitions of StorageTek, MySQL, and SeeBeyond have done nothing to improve the company’s prospects. They certainly have contributed little to Sun’s growth. The company has been modestly profitable at times. Thousand of employees have lost their jobs in the name of these positive operating margins.
The amount of shareholder wealth which has been destroyed over the last several quarters is extraordinary, nearly $11 billion. In October 2007, Sun’s shares traded at roughly $25. After last night’s earnings catastrophe the shares are below $12.75 and it is hard to imagine that improving soon. Sun’s comments about prospects in future quarters have been a joke.
According to the Sun proxy, a typical director made $42,000 in the last fiscal year and and received options awards of about $20,000. Those amounts have been raised for the current year. For what? Is the board actually pleased with its performance?
The share ownership of many board members is modest. Mr. Ridder is shown as owning a grand total of 10,000 shares. Mr. Bennett owns 50,000. It should be hard for Sun shareholders to look at this without feeling some level of disgust.
Mr. Schwartz had a fabulous year in fiscal 2007. His total compensation was over $14 million. Much of that was in stock, but he also received a generous salary and bonus.
Investor and employees, particularly those who lost their jobs, will be happy to note that Mr. Schwartz received over $94,000 for use of aircraft and almost $49,000 for a home security system. The only reason he would need home security would be to protect him from his own employees.
Keeping Schwartz on as CEO is an embarrassment to the board and an injury to shareholders.
As Leo Amery said to Neville Chamberlain after his disastrous time as prime minister "You have sat too long here for any good you have been doing. Depart, I say, and let us have done with you."
Douglas A. McIntyre
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