Subject category:
Strategy and General Management
Published by:
IBS Case Development Center
Length: 9 pages
Data source: Published sources
Topics:
Employee stock options; Microsoft's stock options; Restricted stock options; Expensing options; Profit sharing concept; Executive compensation; FASB (Financial Standards Accounting Board); Wealth sharing concept; Microsoft millionaires; Underwater stock options; Non-qualified options; Cost of options; Capital gains; Pay for performance
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https://casecent.re/p/19908
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Abstract
In the corporate America, owners, co-founders and top executives have been compensated with stock options, a profit sharing concept since the 1800s. Microsoft has extended stock options to the rank-and-file employees since its public offering in 1986. During the IT boom, when Microsoft''s stock prices soared, stock options had created the so called ''Microsoft millionaires''. Stock options helped create a culture of employee ownership and entrepreneurial spirit. But with the decline in stock prices and growing anguish among employees, Microsoft shifted to restricted stock. The pay package was also seen as maintaining a balance between shareholders and employees'' interests. When the stock price was at its zenith, Microsoft''s wealth sharing concept was the best, but when the bear market sustained, Microsoft managed to balance the risk and reward by shifting to restricted stock. The case helps understand accounting, human resource and corporate governance perspectives of the shift in compensation by Microsoft.
About
Abstract
In the corporate America, owners, co-founders and top executives have been compensated with stock options, a profit sharing concept since the 1800s. Microsoft has extended stock options to the rank-and-file employees since its public offering in 1986. During the IT boom, when Microsoft''s stock prices soared, stock options had created the so called ''Microsoft millionaires''. Stock options helped create a culture of employee ownership and entrepreneurial spirit. But with the decline in stock prices and growing anguish among employees, Microsoft shifted to restricted stock. The pay package was also seen as maintaining a balance between shareholders and employees'' interests. When the stock price was at its zenith, Microsoft''s wealth sharing concept was the best, but when the bear market sustained, Microsoft managed to balance the risk and reward by shifting to restricted stock. The case helps understand accounting, human resource and corporate governance perspectives of the shift in compensation by Microsoft.