Microsoft Handing Out Large Stock-Option Grants
Microsoft Corp. management, concerned about the exodus of top talent to Internet start-ups and the sharp drop in its stock price, is quietly doling out large stock-option grants to key employees.
The Redmond, Wash.-based software giant is offering stock-option packages of up to 200,000 shares and additional vacation time to dozens of high-level employees, said Microsoft spokeswoman Kimberly Kuresman on Monday.
Some of the grants are more than five times the size of the normal allotments, employees say. Microsoft officials declined to disclose details of its incentive package, including at what price the options could be exercised.
The new options are linked, in part, to an internal management reorganization that includes the promotion of more than 30 managers and the demotion of others, according to insiders and company officials. Microsoft officials declined to discuss how many people are being demoted.
Since taking over daily control of the company in January, Chief Executive Steve Ballmer has been systematically reviewing the performances of the company’s top managers to decide whether to keep them or push them out, insiders say.
Microsoft recently promoted 30 managers to the vice president level and created a title of “distinguished engineer” for software engineers who oversee critical development work but prefer engineering to management. So far, 13 people have received that designation, the company said.
“Most of the push-outs are coming from Steve,” said Rob Enderle, an industry analyst for Giga Information Group. “He is identifying the ones he wants to stay and making sure they have a package that makes it more difficult for them to leave. He’s also letting other people know if they need to find other work.”
New vice presidents include Yusuf Mehdi, who heads marketing for MSN.com; Will Poole, in charge of the digital media division; and Mike Nash, who directs content development and delivery.
The additional compensation also reflects some deeper challenges for the software giant. Microsoft’s stock is down about 36% this year. The drop reflects uncertainty over the ongoing antitrust battle with the federal government and the shift to selling or leasing its software over the Internet.
Microsoft’s stock closed Monday at $75.88, up $1.75, or 2.3%, from Friday’s sharp 6.5% decline. Company officials say the attrition rate has remained at 7.4% for the last year, about half the industry average. But the lingering uncertainties are taking a toll on morale, employees and analysts said.
