He also couldn't name any other companies that offer a similar program. Raisys wouldn't predict whether other companies might follow Microsoft's move. Certainly it is not a great thing having a bunch of employees running around with a bunch of stock options that are underwater," he said. "From a compensation and employee-retention perspective, it is a positive thing. ![]() Raisys believes the Stock Award program makes sense as a way to glue employees to Microsoft. They said that historically, they would restate their financials so they have an apples-to-apples comparison," said Raisys, who disclosed that he owns Microsoft stock. "The debate in the industry right now is the question of whether stock options should be expensed. Stock Option: A stock option is a privilege, sold by one party to another, that gives the buyer the right, but not the obligation, to buy or sell a stock at an agreed-upon price within a certain. Microsoft's move, however, doesn't mean the company is taking sides in the debate on whether stock options have to be expensed, said Victor Raisys, software analyst at investment bank SoundView Technology Group Corp. has been one of the most vocal in opposing the idea, saying it doesn't make sense because the value of options is uncertain. The company is scheduled to release its fiscal 2003 results July 17.Įxpensing of stock options has been a hot topic among technology companies. Microsoft started its 2004 fiscal year on July 1. However, with the decline in IT stocks, many of them lost their effectiveness.Īs a result of the change in how it compensates employees, starting with its 2004 fiscal year, Microsoft will expense all equity-based compensation, including previously granted stock options, the company said. Stock options were the miracle drug of technology companies at the height of the technology boom, used to fatten compensation packages and attract the best employees. Microsoft is looking at offering employees a way to sell those options to a financial institution, the company said. These options are "underwater," in financial industry jargon. Microsoft also said it is working on a plan to help employees realize some value out of stock options that are worthless because of strike prices above the current value of Microsoft's shares. ![]() ![]() Steve Ballmer, Microsoft's CEO, and Bill Gates, the company's chairman and chief software architect, won't receive stock awards and have never received stock options, Microsoft said.
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