Thursday, November 01, 2007

What's Good for Michael Dell Is Not Good for Employees

In May 2007, Dell Inc. (DELL-$30.60) set about revamping its operations—amid an accounting scandal, personnel changes, and slowing growth in the domestic PC market. As part of a broader strategy to trim costs, the No. 2 maker of personal computers outlined a plan calling for the company to cut 10 percent of its workforce.

“While reductions in headcount are always difficult for a company, "we know these actions are critical to our ability to deliver unprecedented value to our customers now and in the future," company CEO Michael Dell said in a written statement.

Why is it that Named Executive Officers (NEO) rarely suffer the consequences of 'cost initiatives' that non-ordained employees suffer?

In its proxy statement filed on Wednesday with the Securities and Exchange Commission, the company said it paid about $1.05 million for the "personal and residential security" of founder Michael Dell.

The amount shown for Mr. Dell’s security costs represents the amount of company-paid expenses relating to personal and residential security. “The Board believes that Mr. Dell’s personal safety and security are of vital importance to the company’s business and prospects and, therefore, that these costs are appropriate corporate business expenses,” the company said in the proxy statement.

In addition, the Company reimbursed Mr. Dell and former CEO Kevin Rollins $1.86 million and $2.49 million, respectively, for the cost of using their private aircraft (while traveling on Dell business).

It's not what I do, but the way I do it. It's not what I say, but the way I say it. ~ American actress Mae West (1892 – 1980)

Albeit the board rejected all bonuses and performance-based stock awards for NEOs in the last fiscal year, according to the company's proxy, might not Michael Dell have stepped up as an example of restraint?

Yes, security and airline travel expenses coincide with the office of the CEO; but, costs of $1.05 million and $1.86 million, respectively, are beyond prudence. Laid-off staffers at call centers in McGregor (Texas), Roseburg (Oregon), and Twin Falls (Idaho) would probably ‘second’ that opinion.

Editor David J. Phillips does not hold a financial interest in Dell Inc. The 10Q Detective has a Full Disclosure Policy.

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