I think of this as I read a front-page story in today’s New York Times about Bonnie Brown, a staff masseuse at Google who is now a multimillionaire. It’s the classic cubicle-to-riches story: worker is among the first to sign on at unknown Internet start-up. Internet start-up grows up and becomes massive, universe-changing brand. Worker retires to a 3,000-square-foot mansion in Nevada.
I think of this as I contemplate my own sad tale. Call it a cubicle-to-cubicle version of Brown’s. I, of course, do not work for an Internet start-up. Far from it: I work for the world’s largest and arguably most storied media giant. But back in the go-go late ’90s, my company, too, boasted a stock that soared. We had recently been rooked, I mean, acquired by AOL, an Internet start-up that was already a massive, universe-changing brand. We knew no limits.
Money magazine, my employer at the time, had benefited spectacularly from the Internet and stock-market boom. Our monthly issues were as thick as phone books, yielding us writers eight-page features in the well and limitless travel budgets. So in 2000, management decided to take an entrepreneurial, Silicon Valley approach to compensation. They decided to offer their favorite writers bonuses in stock options.
We didn’t object. Why would we? After all, we were the ones who gobbled up Henry Blodget’s predictions of Amazon at $400. We bought the boom whole. When I portrayed the plight of a middle-class family in Japan to show the effects of a market crash and a lingering recession on a developed economy like ours, I received hate mail from livid readers. I remember one in particular: “How dare you suggest America will suffer a similar fate! Our market will never fail!”
In the winter of 2000, I received 1,000 options in Time Warner stock at a strike price around $50. Share prices hovered close to $60 then, and were sure to keep soaring before they vested in four years. That meant that if the stock hit, say, $100—not out of the question back then—then I could keep the $50 profit. A $50,000 bonus! Not bad for a writer, right?
But the stock didn’t hit $100. Between January 2001 and January 2003, Time Warner dropped 78%, from $51.21 to $11.36. In that time, of course, AOL transformed from a massive, universe-changing brand into a pure clunker, unable to keep up with the dazzling changes of its medium and thus unable to hold onto paying subscribers. The market crash that my reader said would “never” happen in the U.S. did, and all of the conglomerate’s business units suffered, including ours. Advertisers reined in their budgets, and our magazines no longer weighed down the postman.
Time Warner stock currently trades at $17 and change. And my “bonus”? Trash. The options are what they call “under water”; its stock trading well below the strike price, they’re deemed worthless.
While it makes sense for executives to tie compensation to company stock, I argue that for most workers, it doesn’t. Our contributions, while valuable, are too far removed from the complex machinations that move stock price to count. I’ll never again accept options in lieue of tangible compensation. Sure, there’s a chance I’d hit the lottery, like Bonnie Brown. But I shouldn’t have to gamble on getting paid.