THE SUN ALSO SETS
Or Why Scott McNealy Must Go
by Robert Bolton
September 1, 2003


Thousands of Sun stockholders and their families have been severely impacted financially by the total collapse of the price
of Sun Microsystems stock.  Thousands of employees have been involuntarily separated and the financial impact on their
families has been devastating.  Anyone, who has followed Sun Microsystems the past few years, has seen the company
stock fall off the cliff.

Why did this happen? What is the root cause of the nearing Sunset?  Is it September 11th?  Is it the economy?  Is it
George Bush?  Is it IBM?  Is it HP? I suggest the root cause of the problem is the lack of Scott McNealy's leadership.  
He plays good golf, talks about his "pet peeves" and throws softball questions to his management team, which provides
good entertainment for employees. He portrays a good image. Leadership is not a solo act performed by a charismatic
CEO. I suggest what Sun needs today is what Gregor Burns in his book Leadership calls "transforming leadership."   
Jack Welch, Bill Gates, and Lou Gerstner have it;  Scott McNealy does not .  Scott talks a good game, but does not
walk the talk.  Just as a decade ago, IBM recognized that John Akers was the wrong CEO to lead it out of its morass, it
is time for Sun Microsystems to face the same realization.

I am very concerned that under Scott McNealy's management US laws might have been violated.  So, as a taxpayer and
a stockholder, I will be filing complaints, asking for investigations by the appropriate federal agencies.  If you have any
information about violations of the law by Sun Microsystems, please email me at webmaster@thesunalsosets.com and I
will pass it on the proper government investigators.   As a stockholder, I am concerned about Sun's future under Scott's
leadership without Ed Zander, Larry Hambly, Mike Lehman and the other executives, who left the company. Without
these executives to support  Mr. McNealy, is SUN headed down the same road as DEC?

If you agree with me that SUN will not rise again until Scott McNealy is removed, then I urge you to vote with your
shares.  Let's get people on the Board of Directions, who will hire a CEO, who is a transforming leader.

In order to shed some sunlight on his management style, I sent Scott the issues below for his response.  I told him I would
include his response in this article, if he responded.  The normally very loquacious Scott McNealy did not respond to any
issue.

Possible Violations of US Laws

I was told that Sun might have violated US immigration laws in downsizing the company.  Can you verify at the risk of
personal penalty that Sun has not violated US immigration laws?  If not, why not?

I was told that Sun might have violated Labor laws in downsizing the company. Can you verify at the risk of personal
penalty that Sun did not violate any US Labor laws?  If not, why not?

It was brought to my attention that in downsizing, Sun may have violated U. S. Civil Rights laws and tried to cover up and
avoid prosecution by offering severance packages to the terminated employees, who were the victims.  By avoiding
EEOC complaints and lawsuits, the government and Civil Rights groups are not aware of the possible violations of the
law.  Can you verify at the risk of personal penalty that Sun has not violated any Civil Right laws while downsizing the
company?  If not, why not?  If not, why should I not file a complaint and ask the U. S. Civil Rights Commission to
investigate?

I was told that Sun might have violated Federal Contract Compliance laws. Can you verify at the risk of personal penalty
that Sun did not violate any US Federal Contract Compliance laws?  If not, why not?  

Knowingly falsifying company Quality and ROSS information is an indication that some executives might falsify financial
information.  Can you verify at the risk of personal penalty that Sun did not violate any US Securities and Exchange laws?  
If not, why not?  

Deceiving Employees

I wrote and asked a company spokesperson to respond to the following question.

As a stockholder, who is concerned about the executive management of the company, I ask you point blank, "why don't you
stop deceiving Sun employees about stock options and adopt a program similar to Microsoft?"

Her response was:

Robert,
Thanks for your message regarding stock options. While we can't address or comment on Microsoft programs, I can tell you a bit about
Sun's position. In July, Sun publicly affirmed its support for stock-based compensation as a driver
of innovation and a valuable tool for competitively attracting, rewarding and retaining key talent. Sun continually reviews employee
compensation to ensure alignment with shareholder objectives and employee benefits. Employee ownership through stock options
remains a key component of Sun's long-term compensation programs and more broadly, a vital driver of an innovative and
entrepreneurial technology sector.

Additional information on Sun's recent statement on stock options is available at www.sun.com.

Thank you. Diane

I responded:

Diane,

I understand that you can't address or comment on Microsoft programs and would not expect you to.  After reading Sun's Position
Paper and Microsoft's position, it is clear that Microsoft's position has more credibility.  For example, the Sun Position Paper states,

"Hundreds of Sun employees have sent emails affirming that ownership in Sun through stock options strongly motivates them to take
risks, work harder, look for ways to save money, and, above all, innovate. As owners, they know that their extra efforts will be rewarded
when the Company is successful."

While Mr. Balmer states,

"Over the course of the last several years it has been clear from input that we've been getting from our employees through our
employee surveys, questionnaires, and polling that we've done of our employees that there was essentially a set of, what shall I say,
anxiety or angst over our compensation approach."

Why is Sun trying to justify its positions on the above statement?  Has Sun had any employee surveys on this topic?  If so, when was it
done, by whom, and what were the results, and why was it not referenced in the Position Paper?  If not, why not?

The Sun Position Paper also states,  
"Over the past 5 years Sun has granted 87% of its option shares to rank and file employees below the VP level."
This statement is misleading to employees, potential employees, stockholders, and potential stockholders.  Why did the Position
Paper not state how much money the rank and file employees have cashed in on those option shares?  And what is the current value
of those option shares?  Is Sun telling its employees that they are better off with stock options  than with the actual shares?
So, as a stockholder, who is concerned about the executive management of the company, I ask you again, "why doesn't Sun stop
deceiving Sun employees about stock options and adopt the a program similar to Microsoft?"  

Sincerely,

Robert Bolton

Then, I wrote Scott McNealy and asked the same question and included Diane’s response and my response to her.  I
requested a response.  As with the other issues, Scott never responded.

Scott,

As a stockholder, who is concerned about the executive management of the company, I ask you point blank, "why don't
you stop deceiving Sun employees about stock options and adopt the a program similar to Microsoft?"


Integrity

Scott,

In the Chairman's letter on Sun's Investor Relations web page, you wrote
"Stakeholders in Sun have always been able to feel good about Sun's integrity. Our reputation starts with a strong,
experienced Board of Directors and carries through to each and every employee, all of whom are required to follow Sun's
Standards of Business Conduct. Our legacy of protecting shareholder assets will not be compromised, no matter what the
economic situation."

Considering Sun’s history of a company Vice President and Director trying to bankrupt a business partner and a small
woman owned business and knowingly falsifying the company’s Quality and Return on Six Sigma (ROSS) information,
why should Sun's stakeholders feel good about Sun's integrity?  Why should the stakeholders trust the company's
management?  Was Sun's Standards of Business Conduct followed?  If not, what will be done about it?
In these times of dishonesty by so many well publicized corporate executives, why should customers, potential customers,
stockholders, potential stockholders, and government agencies like the SEC and the IRS trust the information provided
by  Sun  executives; who lie to their employees, falsify information, and possibility break US laws?

Leadership

Scott,  

Has the past year shown that Scott McNealy cannot effectively lead Sun Microsystems without Ed Zander and the other
executives, who left the company in the same timeframe?  If not, why not?  Why have you not replaced Zander with a
qualified COO?   Do you really think you are qualified to be COO?

Stock Options for Scott McNealy

Scott,

Considering Sun's 80 percent decline in profits in the fiscal fourth quarter and 13 percent decline in revenue, why was
Scott McNealy granted on July 28, 2003 options for 1.5 million shares with an exercise price of $3.85?  Was this action
appropriate at this time?  Is a $3.85 exercise price "pay for performance" or is it a gift?  If "pay for performance", why
was the exercise price not at least $5.00?

Labor Union

Scott,

Considering the large number of employees, who have been involuntarily terminated as part of the downsizing of Sun
Microsystems, what is your response to employees who ask "why should we not join a labor union?"  Who is looking out
for the interest of employees?  Is the answer Sun's HR department?

© 2003 All Rights Reserved