Microsoft employees to get shares instead of options | Computerworld

More recently, in January of this year, Microsoft announced that the company would begin paying a regular dividend to its shareholders. The company also said it was setting up a plan to enable employees to sell some of their stock options that are now without value because of the decline in the company's share price. Under the plan, which is expected to be in place by the end of this year, employees will be able to sell their options to a third-party financial institution.

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Attempting to assess the impact of either expensing stock options or shifting to direct stock awards has been hotly debated within the technology industry, on Wall Street and in Congress. Had Microsoft considered its option grants an employee expense, she calculated the company's earnings would have been lower in , and In , for example, net income would have dropped In , net income would have fallen And last year, net income would have fallen So even though Microsoft stock is no longer the high-flier that it once was a few years ago, the cost of the company's option grants has risen as a percent of earnings.

Microsoft announced the change in its employee compensation plan shortly after the stock market closed.

Today in Business. Updated March 31, , p.

Microsoft to Give Its Employees Stock Instead of Options

But if they left or were fired before a liquidity event, they got nothing. There are only two real reasons for doing this. Since they can take back the options of anyone who leaves, they can give equity more freely to employees coming on board. Because they know the likelihood of payout is so small.

Or any other kind of billionaire. First it appears that employees had no idea what they were signing and they probably expected it would be a normal stock option type deal that everyone in Silicon Valley has done for decades. Skype had an incentive to make things unclear, because employees would demand far more compensation if they had understood.

This is what lawyers call fraud. The option may be subject to earlier termination as provided in this Plan.

Microsoft staff to receive stock grants in new incentive plan

The Employee exercising this option shall have the right to receive property at the time of exercising the option, as long as the property is subject to inclusion in income under Internal Revenue Code Section The price for a share of stock subject to an option granted pursuant to this Plan shall not be less than the fair market value for the stock at the time the option is granted, as determined in good faith by the Committee at the time the option is granted.

The terms of any option granted under this Plan shall make the option non-transferable by the Employee except by will or the laws of descent and distribution, and exercisable only by the Employee during his or her lifetime. The Company shall at all times during the term of this Plan reserve the number of shares required to meet the requirements of this Plan, and shall pay all fees and expenses necessarily incurred by the Company in connection with the exercise of options under this Plan.

A corresponding change shall be made to the number and kind of shares, and the exercise price per share, of unexercised options. Following the merger of one or more Companies into the Company, or any consolidation of the Company and one or more Companies in which the Company is the surviving Company, the exercise of options under this Plan shall apply to the shares of the surviving Company.

Notwithstanding any other provision of this Plan, all options under this Plan shall terminate on the dissolution or liquidation of the Company, or on any merger or consolidation in which the Company is not the surviving Company.

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