Wednesday, July 09, 2003

Microsoft to Abandon Stock Option Plan - I wrote about this a bit here. It is pleasant to know I am was not completely wrong when I said,
Microsoft, historically, has not been a particularly well-paying company, but it has always insisted on hiring the best and the brightest. For two decades they were able to lure tha talent by stock options that were almost guaranteed to be worth six figures in a couple of years, and seven figures if you stuck around long enough. However, that is not longer the case. Despite suriving the market crash much better than all its rivals, Microsoft cannot rely on options to boost employee compensation.


Apparently, Microsoft thinks similarly,
Chief executive Steve Ballmer said the change will help Microsoft retain and attract high-quality employees. Analysts said other companies might follow suit, but Ballmer said Microsoft wasn't trying to make a "grand statement."
"Our compensation philosophy is simple," he said. "We want to be a magnet for the best people by paying smarter. We want to attract and retain employees by offering real ownership and great long-term financial incentives."


I think that is an important move to farther align employee compensation with the direction of the company. It also echoes some of the calls to not treat options as an expense, arguing that instead they should be treated as a dilution of existing shares.

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