Executive Compensation - Microsoft's Risk-return Tradeoff
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Code : GOV0006
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Region : USA |
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Stock Options: The Birth and the Death Profit sharing by employees as a compensation was first adopted by Procter & Gamble in 1938. It was during 1920s and 1930s, companies realized that their employees were not as much concerned about their shareholders as were its top executives and founders. Options gained importance during this period as a pay package that encouraged employees’ contributions towards shareholders interest. Varian Associates in 1948 was the first company to support ‘broad based stock options’. These companies were then followed by 3com, Adobe, Apple andOracle later on.Microsoft was the first company to have extended the stock options to all its employees including the low level staff. Microsoft went for its IPO in 1986, and since then had been awarding options as a part of its compensation package. About 21% of the company’s equity was owned by its employees since then... Restricted Stock Options – Microsoft’s Initiatives Microsoft, including other major companies was seriously considering the issue of expensing or not expensing stock options in its financial statements. In 1994, FASB (Financial Accounting Standards Board) stated in its announcement requiring all outstanding stock options to be included in the accounts of the company as a cost item... |
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