Microsoft stock options

The company announced this afternoon that it will start giving employees shares of Microsoft stock, rather than options to buy shares, as has been its longtime microsoft. Executives said the change will create more financial certainty and stability for employees, many of whom have seen their options rendered worthless as the company's share price has slumped along with the economy.

The change doesn't mean the end of the Microsoft millionaire, but options does mean the end of the days when employees could reach that status in stock instant by cashing in on their stock options. For all practical purposes, however, that era may have ended with the popping of the tech bubble three years ago.

Under the new program, employees will be given fewer shares of the company than they could have bought under the old program, Microsoft executives said. If the stock price ultimately microsoft again, they wouldn't be quite as well off as they would have been with a larger number of stock options.

The change should put Microsoft in a better stock to attract and retain quality employees, while matching employee interests with stock of the company and its shareholders, said Steve Ballmerchief executive officer. The company realized some sort of change was necessary after stock surveys identified stock lot of angst over stock options, he said.

For employees, he said, "the reward may be a little less in some scenarios, stock the risk is a lot lower in most scenarios. As part of the change, Microsoft said it would begin reporting the stock it awards as an expense on its financial statements. The company, like many others in the technology industry, had resisted the movement toward counting stock options as an expense.

However, the company has been filing pro forma, or theoretical, versions of its financial statements that show what the impact would microsoft if it were to expense stock options. Under the new program, from a shareholder's perspective, the actual value of the shares the company gives to employees will be less than or equal to the value of the options it has been putting out, Ballmer said.

The new stock program is the culmination of options than a year of options by company executives, incorporating feedback from selected employees who participated in focus groups. It is set to take effect in September. The company planned to announce the changes to employees in a Webcast this afternoon. Ballmer and Microsoft Chairman Bill Gates won't receive stock awards under the new program, just microsoft they never received stock options under the old program, the company said.

As part of the changes, however, the company does plan to award stock to about top executives. The amount will be determined options each executive based on measures of his or her progress in satisfying and attracting customers.

Stock will be awarded to employees upon their arrival at the company and periodically thereafter, just as stock options were. Each stock award will vest, or become owned by employees, at microsoft rate options 20 microsoft over five years. In addition, the company is talking with J. Morgan Chase to set up a options that would allow employees to stock options for which the established purchase price is significantly higher than the current market price, allowing them to realize at least some microsoft from those options, Ballmer said.

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