The case for stock options

Your executive compensation headlines [June 4] makes one think about the fairness of such large awards. I cannot argue for the broader market, but for the technology industry and for ExactTarget in particular, by looking at the interests of the stakeholders, employees, investors, customers and the community, such awards make sense.

Stock options for executives can be abused, but in the case of early-stage technology companies where they are used for many employees, they are an incredible tool to reward employees based on the success of their team.

When young technology companies like ExactTarget, Interactive Intelligence, Aprimo, Angel Learning or Scale Computing get started, they do not have the cash to pay people a market rate. So they give each employee an ownership stake and an opportunity to cash in if the company creates value.

Since 2000, ExactTarget has issued stock options to all North American employees. Early on, ExactTarget was not able to pay as much as established companies, but an important part of its incredible culture was to make everyone an owner of the business.

Employees, investors, customers and the community are happy that Scott Dorsey and Traci Dolan had significant success.

In the case of employees, the potential cash value is over $170 million. The important thing to remember is that these dollars can only be realized if the company continues to succeed.

Based on its impressive returns, are any of the investors disappointed with Scott’s potential reward? He has less than 4 percent of the value that was created.

Customers are happy because they want a great product and great service, which the ExactTarget culture produces because employees understand that their own success depends on that of their customer.

It is really easy to see how Indianapolis is a better place because of Dorsey, Dolan and ExactTarget—great jobs, wealth created from the investments, the philanthropy, the economic development of the tech industry and the tax base. Well done, and our community should be happy for their financial success based on the risks they took and 10 years of hard work that have benefited us.

____________

Mark Hill
chairman, Techpoint