The Players: Legal issues accompany high salaries

Microsoft wanted Anders Hejlsberg in a bad way.

The chief architect of Borland's Delphi development project was being courted by Bill Gates himself last fall, with figures that would have made Barry Bonds proud: a $1.5 million signing bonus, a base salary of up to $200,000, and options to buy 75,000 shares of Microsoft stock.

Borland made a counteroffer, according to court documents, but Microsoft came right back "overnight"--with another $1.5 million up front.

"It's a lot like baseball. You have a whole lot of free agents that have waited for their contract to expire," Michael Page, an attorney with Keker & Van Nest, said of today's high-tech job climate in a recent interview. "You have people waiting for their shares to vest and then they jump ship."

Hiring in the technology industry has always been a contact sport, but the explosion of the Internet and its vast potential for wealth have turned the arena into a battle zone where companies will go to practically any lengths to keep or hire away the best and the brightest--making human beings the commodity of the '90s.

At first glance, this would appear to be nothing but good news for all high-tech workers, from Silicon Valley in California to Route 128 in Massachusetts. But with the salary juggernaut has come another price, one sometimes paid by the employees themselves, in the form of legal action taken by their former companies. Hejlsberg, for example, is one of 34 people mentioned by Borland in a lawsuit filed earlier this month against Microsoft charging unfair hiring practices.

892K Bill Gates on the value of "knowledge workers" at Microsoft's CEO Summit (May 8, 1997)

And the objects of this simultaneous pursuit and revile are not confined to the elevated ranks of chief executives. Increasingly, the most sought-after employees are those who have traditionally toiled behind the scenes, the "code warriors" responsible for turning millions of digits into billions of dollars.

"The five-, ten-year engineers are the superstars of the industry right now," said Les Fenyves of executive recruiting firm James Moore & Associates in San Francisco, who has been in the business for 12 years. "They make 20, 30, 50 percent raises whenever they make job changes."

The principal reason for this salary inflation is, not surprisingly, directly related to the Internet. Not long ago, engineers say, products would be developed months after a new set of specifications came out. Research, marketing strategies, distribution channels, and the rest of the corporate machinery would crank up in due course.

Now, like everything else in cyberspace, these processes have been compressed into Internet time, which often means days.

"The five-, ten-year engineers are the superstars of the industry right now. They make 20, 30, 50 percent raises whenever they make job changes."
"helvetica"="" size="-1" color="#666666">Les Fenyves, James Moore & Associates

"You see new versions of Netscape's Navigator and Microsoft's Internet Explorer coming out every couple of weeks, and we feel the pressure to keep up," said one programmer at a major database software company with more than 20 years of experience. "The Web has changed everything."

Including hiring tactics. One executive with a Silicon Valley software company said an independent recruiter once had the audacity to surreptitiously construct an unauthorized resume outlining her background based on a single phone conversation with her, then send it out to various companies.

"I got a call from a company and didn't know what they were talking about," she said. "This recruiter--I think it's illegal--called and wrote up a resume based on a conversation with me. All he said was, 'I have some opportunities you might be interested in--why don't you give me some information about yourself?'"

1.7M Microbar CEO Bruce Juhola on keeping employees (September 1996)

The desperation for skilled employees is not surprising: Unemployment among midlevel information technology professionals is virtually nonexistent. So small is the labor pool that some universities and even private companies are starting their own training programs to bring some homegrown talent into the market.

Not everyone minds the attention. The demand has created substantial increases in salaries at all levels of the industry, bringing the national average for a high-tech worker to $46,986 in 1995, 71 percent more than the $27,440 average wage for the private sector as a whole, according to a study released earlier this year by the American Electronics Association.

That figure rises commensurately in California and other areas with higher costs of living.

"I have a candidate with six years' experience, masters from a good school in Toronto, a top program in computer science," Fenyves said of a new recruit. "In a week I generated a dozen interviews. Of the four companies he considered, four made offers. He makes $60,000 now, which got bumped to $72,000, then to $85,000 plus an $8,000 signing bonus, a $10,000 annual bonus, and 10 percent of his salary in stock options.

"He's 28."