Microsoft is awarding stock options to seven of its top executives to keep them around as the company transitions to a new CEO, according to a company filing Monday.
More than 1.6 million shares will be distributed to the seven top executives, who include COO Kevin Turner; Bradford Smith, general counsel and executive vice president of legal and corporate affairs; Eric Rudder, senior vice president of Microsoft's Advanced Strategy and Research group; Amy Hood, executive vice president and CFO; Lisa Brummel, executive vice president of human resources; Frank Brod, corporate vice president and chief accounting officer; and Anthony John Bates, executive vice president of business development and evangelism. At current stock prices, the move amounts to more than $53 million in incentives to the executives.
The move comes after Microsoft CEO Steve Ballmer announced in late August he would be stepping down from the top position within 12 months, with no hint as to who would replace him. As part of Microsoft's recent high-profile Nokia deal, Nokia CEO Stephen Elop will also be receiving $25.5 million to make the switch to Microsoft.
In the filing, Microsoft said the move is "preserving our competitive position by enhancing retention on key executives with critical skills of strategic importance" and "ensuring continuity of key leaders during the transition to a new chief executive officer."
The awards are contingent on the executives remaining with the company and will vest over a term of at least 30 months. The biggest chunk of stock goes to Turner, who will individually receive more than half a million shares of stock.
The move points to the increased competition Microsoft is facing in the technology sphere and how the tech giant is looking to be proactive about keeping its top executives on board, said Scott Steinberg, a high-tech analyst and professional speaker on technology and innovation.
"When you have a major shakeup at the top and have it at a wide scale, it's going to cause people to wonder," Steinberg said. "It's only human to look for a change of scenery when the scenery starts to change around them."
Bill Parish, a registered investment advisor with Parish & Company, said Microsoft may have another motive: taxes. He said the move could positively affect Microsoft's earnings through inflating income, which is not reflected as a cost on the company's earnings statements.
"They need to do something to keep their earnings up," Parish said. "Their earning should be on the cusp of imploding due to competition from Apple, Samsung, and the Chromebook hasn't even hit yet. They're probably getting very sensitive to do something to impact their earnings going forward."
PUBLISHED SEPT. 24, 2013