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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

October 30, 2009 at 1:57 PM

Microsoft alters sweetheart housing deals for execs

In response to complaints about the sweetheart housing relocation deals it offered to some executives, Microsoft is changing its policy — a little.

Complaints arose after Microsoft disclosed in a September proxy that it took a bath on real estate deals made to recruit Business Division President Stephen Elop. Relocating him to Redmond cost $4.1 million in part because Microsoft covered the loss Elop took when he sold his California home.

Microsoft also helped Chief Financial Officer Chris Liddell and Chief Operating Officer Kevin Turner when their homes didn’t sell as quickly as expected. The company bought them at prices set by appraisers, then sold them at a loss.

This might not be an issue at a company that prints money, but lately Microsoft has cut jobs and suspended construction on its own real estate in Redmond.

In response to grumbling and catcalls, the company altered the benefit for execs, but didn’t eliminate it.

Microsoft added a clause saying it will recover these real estate losses if an executive quits within two years of joining the company. That’s up from the previous one-year binder.

Here’s how J. Ritchie, vice president of compensation and benefits, explained it on the Microsoft on the Issues blog today:

We’ve also received constructive input on areas that certain stakeholders feel we could improve upon. One topic that arose this year is the relocation benefits we offered to several executive officers who moved their homes and families after accepting a job with Microsoft. In a few instances in recent years the company agreed to accept some risk on the re-sale of an executive officer’s former home, but the collapse of the housing market led to unanticipated costs for Microsoft.

While we believe these agreements were fundamentally fair to both Microsoft and the executives when they were made, in response to the feedback we’ve received we are changing our policy so that if an executive officer voluntarily leaves Microsoft within two years of joining the company, we can recover amounts paid for relocation assistance. There may be circumstances where we have a longer recovery period. Our previous policy was to require reimbursement of relocation assistance only if the executive left Microsoft within one year.

Did the company go far enough to ward off the pitchforks?

Comments | Topics: Microsoft

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