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Friday, Sep 30, 2022
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CYBERBUCKS–Gateway Exec’s Pay Is a Fascinating Study



IdeaEDGE Ventures Offers A Lineup of Heavy Hitters

Last week Bill Gates, the world’s richest man, lost more than $12 billion in one day. Given the way the stock market was battering Microsoft stock since a federal judge ruled it was a de facto monopoly, that loss is probably a lot higher today.

That tidbit fascinates me, and probably a lot of other readers, but maybe it’s not something that’s relevant to a local business publication.

So how about this: Last year, Gateway Inc.’s new CEO, Jeffrey Weitzen, was granted a total pay package valued at $77.1 million, according to the company’s proxy statement.

To be fair, the bulk of that money is in the form of 2 million in stock options Weitzen was granted in 1999. Using an SEC-required method of valuing these options at a present-day value, the total came to $75.6 million.

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John Spelich, Gateway’s director of corporate communications, said it’s not accurate to say Weitzen was paid $77 million last year.

Weitzen’s real pay last year was about $1.5 million, the result of his regular salary of $790,000 plus his bonus of $711,000. Also, the options Weitzen were granted cannot be exercised until much later, most of them years into the future. The rules permit exercising only a fourth of the options granted after a year expires, he said.

Although Weitzen isn’t able to exercise any of those new options just yet, he cashed out options he already owned last year, pocketing $11.2 million in the process, Spelich said.

So to be absolutely accurate, you could say Weitzen took home $12.7 million in 1999, which probably doesn’t even crack the top 20 of highest paid CEOs in the U.S. last year, but in San Diego it’s definitely above average.

Heck, that’s even more than Ted Leitner made.

“That may seem high, but it’s in line with the pay level to reward and retain a CEO of Jeff’s caliber,” Spelich said. “By no means is he out of line with what other tech executives are being paid.”

In defending Weitzen’s pay, Spelich noted the company’s terrific performance , it did $8.65 billion in sales , and the run-up on its stock. It started the year about $26 and ended close to $80. Of course recently, Gateway, like much of the rest of the high-techs, has come down quite a bit, to the mid-$50s.

By the way, the same 1999 proxy shows Weitzen, who took over as president and CEO on Jan. 1, made more than Ted Waitt, the founder and former CEO. Waitt earned $1.9 million in salary and bonuses. As for options, he was granted a total of 320,000 shares that were assigned a value of $6.1 million.

But don’t feel sorry for Mr. Waitt. He’s the owner of more than 64 million shares, or 41 percent of Gateway. That would put his net worth at more than $3.5 billion. Still, compared to Bill Gates, that’s chicken feed.

Like I said, this type of financial news gets my attention.

The amount of money being tossed around these days by high-tech investors, venture capitalists, and dot-com pooh-bahs bowls me over. The other day I received a news release about an IPO of a San Diego start-up that resulted in $15 million in equity infusion.

That sum isn’t much by today’s standards, but this was funding for a company that lost nearly $5 million in the last two years.

Given the number of high-tech companies based here, and the more than 25,000 workers employed by these firms, it’s an area that deserves more coverage.

The focus of my coverage will be what these companies are making, not so much in terms of products, but in terms of dollars.

Which ones are making a profit, and which ones are on the verge of bankruptcy? What companies are ripe for takeover by the likes of a Microsoft or Intel, and which ones mulling buyouts or mergers? And what are industry experts saying about these companies?

As a way of introduction, my experience as a reporter on this paper has been centered on government and politics, along with a few other subjects. Yet I have done many stories about high-tech and have an extensive background in financial reporting. I’ve been a business reporter for 10 years.

This column won’t focus exclusively on the bottom line. Occasionally, it will look at some of the players in the local tech industry: where did they come from, how did they get their jobs, where do they think their industry is headed, and what gets them going when they wake up in the morning.

That kind of stuff also fascinates me, as I hope it does you, too.

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New Incubator Forms: They are calling the latest San Diego incubator “an accelerator and management firm focused on creating a new generation of Internet companies.”

That may sound like hype, but with the names associated with the new entity, called ideaEDGE Ventures, it’s certain to draw attention. Certainly front page daily newspaper articles can’t hurt either.

The three major financial backers of the incubator, now operating in Sorrento Valley, are Enterprise Partners, the largest venture capital firm based in San Diego; Sienna Holdings, a VC firm based in Silicon Valley; and Investor AB, from Sweden.

Two other investment partners are Qualcomm Inc. and Silicon Valley Bancshares. Although the total capital invested in the incubator wasn’t revealed, the announcement noted the funding amount available to start-ups was more than $1 billion. That figure actually represents the combined funding total of the three VC firms.

The founding management team for the incubator all have ties to some of the most successful high tech companies in the nation and include Jim Collas, former senior vice president at Gateway; Rick LeFaivre, who worked at Sun Microsystems, Apple Computer and Borland International; Dan Pittard, a former exec with Gateway and Frito-Lay; and Tom Schmidt, yet another Gateway alum and former general manager at Allied Signal.

IdeaEDGE’s advisory board is an all-star lineup led by Gateway chairman Ted Waitt, and includes Paul Jacobs of Qualcomm; David Nagel of AT & T; John Sculley, former chairman of Apple; Maynard Webb of eBay; and Bill Weiss, chairman of the Promar Group.

Tyler Orion, an incubator consultant who is also executive director of the Pacific Incubation Network, said the more incubators, the merrier.

“There’s definitely room for more because we have such a huge start-up community down here,” Orion said. “They (ideaEDGE) seem to have some impressive people affiliated with them and that’s exactly what it takes.”

Allen’s Cyberbucks column will appear every other week. E-mail on possible stories can be sent to mallen@sdbj.com.

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