It pays to be a Novell exec

Last time, I promised I’d make a recommendation for one area in which Novell could really save a dollar or two. But before getting into that, there’s one more area of the financial statements and the speeches and press releases surrounding them that I want to bring up – the “success” of SuSE Linux.

According to the press release, “During the fourth fiscal quarter 2005, Novell recognized Linux platform revenue of $61 million, which was up 418 percent from the year ago quarter.” Sounds impressive, doesn’t it? But the release goes on to explain that, “Linux platform revenue included $46 million from sales of Open Enterprise Server (OES) and $15 million of revenue from other Linux products and services.”

So existing NetWare customers who upgraded to OES and are running it on a NetWare kernel are still being counted as Linux customers! I’ve mentioned this before, but now I really want to find out – if you are running OES why did you buy it – was it so that you could run NetWare services on Linux, so you could stay up-to-date on NetWare servers, or some other reason? And which kernel are you running your servers on? Drop a note to me at dkearns@vquill.com and put OES in the subject line.

Now, about saving money for Novell. We looked at new Chief Operating Officer Ron Hovsepian’s contract last month and noted that for giving up his role as chief salesman to move into the “office of the chairman” he got a promise that he’d either become CEO eventually or be given a $1.5 million “consolation prize.” That’s on top of the huge pile of dollars he’s being paid to be COO. With the release of the fourth-quarter financial statements also comes word of the remuneration package for new Chief Technology Officer Jeffrey Jaffe. It seems that (according to news.com):

“Jaffe will be paid a salary of $450,000; a minimum bonus of $225,000 that could be as high as $450,000; a $300,000 signing bonus, $600,000 if he stays for a full year; and $75,000 relocation expenses to move to Waltham, Mass., where Novell is headquartered. In addition, Jaffe got 300,000 stock options with a $7.93 exercise price – 200,000 of which are dependent on meeting certain performance goals – and the right to purchase 100,000 restricted shares at 10 cents apiece. And under his severance agreement, Jaffe will get 1.5 times his salary; a prorated bonus; accelerated vesting of stock options and restricted stock; and financial help of up to a fifth his salary to get a new job.”

As Phil Windley, former CIO for the state of Utah said, “I’d have done it for half that.” And I’d have done it for a third less than Phil!

Eliminate Jaffe’s potential $1.8 million payout and the $1.5 million “golden parachute” Hovsepian has lined up (without even taking Hovsepian’s annual pay package into account) and there’s $3.3 million that the company can ill-afford to pay out. It’s not as if the company hasn’t done without a COO and a CTO for quite some time now.