When Mercury Computer Systems Inc. wanted to turbocharge its share price it dangled a particularly juicy carrot in front of its top executives: Porsche Boxster sportscars. The executives delivered. Mercury’s share price has tripled since CEO James R. Bertelli laid down the challenge in January 1999. So last month the company delivered. Car-carriers brought nearly two dozen Porsches to the company’s Chelmsford, Massachusetts, headquarters, and local media were on hand to capture the kids-in-a-candy-story atmosphere as the happy execs streamed out the front door with car keys jingling.
But is this any way to motivate senior management? “I have a file labeled ‘stupid compensation plans’ and this is going in it,” says Fred E. Whittlesey, a founding principal at Compensation and Performance Management Inc. in Newport Beach, California. Whittlesey argues that the substantial stock options top managers no doubt hold are ample reward. “If I were a shareholder, I’d be upset,” he says.
Not so fast, argues G. Mean Wyman, Mercury’s CFO. The cars weren’t bought outright, he claims, but are being provided on a two-year lease, for a total cost to Mercury of just under a half million dollars. And the employees have to ante up their own insurance premiums.
Wyman argues that the cost is well worth it, because not only have the executives performed well, but the ensuing publicity from this distinctly Silicon Valleyesque form of motivation will help the $106 billion microchip maker attract the kind of talent it needs to fare well in the years ahead. “When you look at our overall budget for recruitment and retention,” Wyman says, “$250,000 a year for two years is not out of line with the things we do.” Three of the cars are set aside as loaners for employees who win internal contests or otherwise merit a little time in the fast lane.
The company had hoped the program would increase its visibility, Wyman says, and on that score it has succeeded beyond all expectations. Indeed, who knows whose radar screens the company will now show up on?