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Microsoft to pay execs who stay, pay those culled during reorg turmoil

Gregg Keizer | Oct. 1, 2013
Awards $60M to 8 execs on the same day that board okays retention payments

The new policies are "an additional measure to help ensure continuity of key leaders by providing ... a severance benefit if they are terminated without cause," the filing stated.

Executives let go will receive severance equal to their annual base salary, as well as a prorated payment of their expected cash bonus. The stock grants set to vest in the next 12 months will also vest on a pro rata basis.

The severance benefits — which were detailed in a separate document filed with the SEC — come with some strings: The executive must sign an agreement promising not to disparage Microsoft and would be barred from working for competing companies for 12 months.

Some of the plan's provisions and caveats were reminiscent of the deal struck earlier this year between Microsoft and Steven Sinofsky, the former head of the Windows division who was reportedly pushed out the door in Nov. 2012 after clashing with Ballmer once too often. Both Microsoft and Sinofsky cast his exit as a mutual decision, however.

Under that agreement, which was made public in July, Sinofsky was to receive stock worth approximately $14.3 million at the time.

The retention and severance moves may be a signal that the Microsoft board anticipates additional management turbulence driven by the restructuring, a protracted search for a CEO or the possibility that said CEO would be allowed to reverse some or all of the initiatives that Ballmer has instituted, including the reorganization and the pivot to a "devices-and-services" strategy.

On one hand, the directors are trying to insure that current executives stick with the company, while on the other creating a mechanism that will prevent them from working for rivals if they are discarded.

 

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