Cutting bonuses and management is Dell's new strategy

Monday, February 5, 2007

The return of Michael Dell as the chief executive officer of computer-making giant Dell marked a series of changes. In his memo to the employees of the company he founded, Michael Dell said that there will be no bonuses and that the company will reduce its management in an effort to cut costs.

2006 was not a financial success for Dell. It lost its leading market position to Hewlett-Packard, and the SEC started investigating Dell for possible accounting improprieties. Several executives also left during recent months.

The daily newspaper Austin American-Statesman reported the Rollins memo and posted on its website a copy of the e-mail. The e-mail was confirmed by Dell's spokesman for the Associated Press.

Michael Dell's memo also outlined the fact that all bonuses would be replaced by so-called "limited discretionary awards". The beneficiaries of such awards will be all but senior management. There will also be a shortening in the period of stock investing.