Tech Stock Valuation

focusing managerial attention on near-term accounting performance to the

detriment of long-term value maximization. To combat such myopic behavior,

more and more companies are insisting that managerial compensation be

directly tied to long-term performance. An efficient means for establishing this

link is to demand that top management hold a significant stock position that

cannot be sold until some time after retirement. When it was an independent

entity, investment bank Salomon, Inc. established a compensation plan whereby

managers were required to take a significant portion of total compensation in

the form of common stock that could not be sold until ...