There are multiple articles today about Microsoft’s announcement that it is abandoning its stock option program and will begin awarding its employees actual shares of restricted stock instead:
- Boston Globe: “Microsoft drops stock options; Workers to get shares outright.”
- Reuters: “Microsoft to end stock options, start expensing grants.”
- CBS MarketWatch: Microsoft Junks Stock Options.
- CNNMoney.com: “Microsoft’s better option: Back to sanity: The decision to end the options game is good news for Microsoft and for tech.”
- SFGate.com: “Microsoft to halt stock options: Tech giant to give shares as expense.”
- Bloomberg.com: “Microsoft May Boost Dividend After Scrapping Executive Options.”
The front page of the Wall Street Journal also reports: “Microsoft Ushers Out Era of Options: Software Giant Exchanges Symbol of Bull Market For Restricted Stock.” The article discusses how Microsoft employees will have the opportunity to sell their nearly worthless “underwater” options which they already hold, in an arrangement with J.P. Morgan Chase & Co. The article quotes Microsoft CEO Steve Ballmer as saying in an interview that grants of restricted stock will prove more valuable to employees than options at a time when Microsoft shares are unlikely to rise as rapidly in value as they did in the 90’s.
Mike O’Sullivan at CorpLawBlog has a more extensive post yesterday and today on the Microsoft news.
All of this comes at the same time as a ruling from an advisory group of FASB as reported in the Philadelphia Inquirer: “Board rules options can be easily valued.” The Board’s nine-member Option Valuation Group yesterday “rejected arguments from computer companies that forcing stock-option expenses to be deducted from earnings would add a volatile element to financial statements because it was impossible to determine their value.” The article reports Standards board chairman Robert Herz as saying that the “data needed to value employee stock options is accessible . . .and can be precise.”