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Sun Microsystems Shareholders are angry on Jonathan Schwartz’s pay; shouldn’t they?

By Amarendra Bhushan for CEOWORLD Magazine Updated:November 6, 2008

Shareholders in Sun Microsystems Inc.– “The Network is the Computer” –, perhaps angered over news reports about CEO Jonathan Schwartz’s ballooning pay packages, voted for more say in executive compensation.

At the company’s annual meeting today, two-thirds of Sun’s stockholders voted for the proposal, which is non-binding. “The fact that the stock has been diving and diving and diving and is never pulling out of this dive, you start to wonder — how long can you keep diving before you lose all your stockholders?” asked one shareholder during the question-and-answer period. “How long can you be in freefall and still survive?”

“Why is Sun falling while HP and IBM’s revenue continue to increase?” asked another shareholder. “What’s Sun’s strategy for leading the market? Lately it’s been a case of you either lead or you lag, and Sun Microsystems has been in the lagging category.”

One stockholder said the split reduced the “intrinsic value” of his shares. “This was a very bad deal for me as a stockholder; I’m sorry it happened,” he said.

Schwartz responded by reiterating arguments he has made in the past. Sun is positioning itself for growth by developing innovative new server systems, he said, and by trying to expand its addressable market by attracting new customers with its open-source software, including the MySQL database it acquired earlier this year.

“Historically, the problem for Sun has been expanding beyond our traditional customers,” he said.

“When the stock was at $24, that put us in a very different selling position than when we were defending a share price of less than 10 bucks. We’re obviously not happy about that and we’re doing something to improve it,” he said.

Jonathan Schwartz
Chief Executive Officer and President
Sun Microsystems, Inc.

Jonathan Schwartz is chief executive officer and president of Sun Microsystems, and a member of Sun’s board of directors. He became Sun’s CEO in 2006, succeeding the Company’s co-founder and current chairman of the board, Scott McNealy.

Schwartz was promoted to president and chief operating officer in 2004, and managed all operational functions at Sun – from product development and marketing, to global sales and service. An inveterate communicator, Schwartz has led Sun’s drive to engage the marketplace, and redefine corporate transparency.

A leader behind many of Sun’s open source and standard setting initiatives, Jonathan’s been an outspoken advocate for the network as a utility with more than just value for the computing industry – but as a tool for driving economic, social and political progress.

Prior to his position as COO, Schwartz served as Sun’s executive vice president for software, its Chief Strategy Officer, and held a variety of leadership positions across product and corporate development. He joined Sun in 1996 after the Company acquired Lighthouse Design, where he was CEO and co-founder. Prior to that, Schwartz was with McKinsey & Co.

Schwartz received degrees in economics and mathematics from Wesleyan University.

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