An Embarrassment Of Valley Tycoons

San Francisco

November 7, 1997

Eric Ellis in San Francisco discovers the little known mega-rich heads of Silicon Valley's top companies. They are the new giants of the world economy - but you've probably never heard of most of them.

"THEY" are Silicon Valley's biggest earners, Big Technology's highest-paid salary earners leading companies that are powering the next phase of the United States' economic domination.

Starting with the $US98 million ($132 million) pocketed last year by Andy Grove, the Hungarian-born boffin behind chip-making giant Intel, the top 100 have been propelled into the league of the super-rich by a rocketing US sharemarket.

Technology's propulsion of Wall Street has sent Silicon Valley stock options soaring.

Grove earned almost $US95 million of his 1996 earnings by exercising stock options; if he'd held on he'd have pocketed another $US33 million.

The same goes for the Valley's next biggest earner, Cisco Systems' hyperactive president John Chambers.

Chambers earned $US33.2 million in 1996, $US26.3 million through the sharemarket, but almost $13 million under what he could have made had he waited for Cisco's price to pick up.

According to the San Jose Mercury News, the Silicon Valley authority, the stockmarket bonanza has lifted executive remuneration by 34 per cent from 1995, and it is double the levels of 1994.

But despite the embarrassment of riches, there are grumbles. That's mostly because the executives have, in the main, delivered. Cisco's shareprice has risen 33 times since John Chambers arrived in 1991, and Intel has been one of Wall Street's most stellar performers these past two years, with little in sight to see it stopping.

"In many of these situations, it's hard to complain about CEOs making tens of millions, when they've given their life to the company and created billions in value for shareholders," says Joseph Grundfest, a lecturer at Stanford University and a former Securities and Exchange Commissioner.

Though collecting over $US1 billion in pay in 1996, Valleymen have, however, shown more vision in the office than in their dealings with Wall Street.

Or maybe they know something the market doesn't. The Mercury News study found that the top executives on their list could have netted an average 56 per cent more in stock payouts had they held on to their advancing shares.

The top 770 executives of the Valley's 150 biggest companies collected more than $US1 billion in pay in 1996. Gerald Hsu, the chairman of Avant, netted $US2.2 million - and he was in the 100th slot.

The list throws up some interesting asides.

The billions lost by the now dumped Apple Computer's former chairman haven't affected Gil Amelio's bank balance. Amelio slotted in at 21 on the Mercury News list with $US10.3 million until his departure, some of which he earned at the distinctly more profitable National Semiconductor, which he left to take on Apple.

The man he replaced, Mike Spindler, didn't miss out either, taking a $4.6 million bite out of Apple.

Ronald Schmidt, executive vice-president of Bay Networks, received $US11.71 million in 1996, despite Bay's shareprice bucking the trend and heading south to half its previous year's level.

There are no women on the Valley Top 100 Rich List, and the highest earning female executive, Ms Susan Wang, chief financial officer of Solectron, comes in at $US1.92 million, three-quarters of which she made exercising company options. Her male boss made $US829,893, all in salary.

The youngest earners are 38, somewhat belying the Valley's image of a pizza-fuelled paradise of pimply billionaires.

A famous names not on the list is Netscape's Jim Barksdale, who paid himself just $US100,000 and no options in a commitment to get Netscape's shareprice moving again.

Still, Barksdale is not exactly in penury. He made hundreds of millions the previous year when Netscape went public in a billion dollar float.

Oracle's flamboyant number one, Laurence Ellison, received $US19.07 million, but his number two, Raymond Lane, proved to be a better market tipster by earning $US19.95 million.

That made up for the fact he was paid $US800,000 less than Ellison's $US2.3 million in salary and bonus. Ellison "lost" $US28.5 million by selling too early.