For Microsoft Corp shareholders, the holidays will likely come early this year in the form of a one-time US$3 dividend that's part of the company's plan to return some of its US$64.4 billion cash horde to shareholders.
But Microsoft won't hand out the cash unless shareholders allow the company to alter its stock compensation plans, so employees who hold stock options and stock awards aren't hurt by the dividend payout. Shareholders are being asked to approve the proposals at today's annual meeting.
PHOTO: AP
The move underscores that Microsoft, while eager to gratify its shareholders, also is anxious not to alienate employees. Many of its workers expect considerable wealth from stock compensation programs, and have seen those hopes soured as Microsoft's once skyrocketing stock price has remained relatively flat in recent years.
"The days of the Microsoft millionaire are over and it's never going to be like it was in the 1990s, but it's still a very important part of employee compensation. So Microsoft is making sure that as they're pleasing shareholders, they're not hurting employees," said analyst Matt Rosoff with independent researchers Directions on Microsoft.
He believes the proposal is sure to pass -- especially since shareholders don't get the dividend if they don't agree to it.
A one-time dividend can be harmful to people holding stock options or stock grants because the company's stock price is expected to fall by the amount of the dividend. For shareholders, that drop is counterbalanced by the dividend itself, but people who hold only grants or options don't get the dividend.
To make up for that loss, Microsoft is asking shareholders for permission to employ a formula that would decrease the strike price -- the price at which stock can be bought at a certain point in the future -- of employees' options while also increasing the number of options the employee receives. Microsoft recently switched from offering stock options to stock grants; employees who hold stock grants would simply see the amount of the stock grant increased to counterbalance the expected stock price drop.
Microsoft says it's the same formula that would be used to adjust stock compensation if there is a stock split or similar event. And it says keeping employees from being disadvantaged ultimately benefits shareholders as well.
If the proposal is approved, Microsoft will pay out the dividend on Dec. 2 to shareholders of record as of Nov. 17.
Menachem Brenner, a finance professor at New York University, said he hasn't seen many cases of companies asking to adjust stock compensation plans to account for a one-time dividend. But he thinks it's the right thing to do.
"They used the word `fair,' and it really is an issue of fairness," he said.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2