Microsoft exec’s big expensive move…
On Friday, Microsoft (MSFT) announced that its board had adopted a “say on pay” plan that will allow investors to vote every three years on compensation for senior executives.
We don’t mean to be cynical here — not too much, anyway. But what was particularly ironic about that announcement was that it came on the same day that Microsoft filed its preliminary proxy which had some interesting details about Stephen Elop, the former COO of Juniper Networks (JNPT) who was hired last January to serve as president of Microsoft’s Business Division.
In the filing, Microsoft notes that “During fiscal year 2009, other than relocation assistance, we did not provide any significant perquisites to our named executive officers” which sounds great until you skip down to footnote 4 to the summary comp table and then sub-footnote (it’s a footnote to footnote 4) 1, which notes that Elop’s relocation cost a whopping $4.1 million and goes on to say this:
As part of our executive relocation program, in fiscal year 2009 Mr. Elop received assistance with relocation expenses, including travel, shipping household goods, and temporary housing. As part of the arrangements negotiated to induce Mr. Elop to accept an employment offer and reflecting the specific circumstances of his hiring, he also received assistance with the sale of his prior home. We agreed to purchase his former home at a price equal to the average of three independent appraisals because he was unable to sell the home within a mutually agreed time. We also agreed with Mr. Elop that if the appraisal resulted in a loss on the sale of his prior home, we would pay him the difference between his home purchase price (adjusted for improvements) over the appraised value. Because of the precipitous decline in the California housing market over this period, the price at which the house ultimately sold was significantly below Mr. Elop’s purchase price adjusted for improvements.
Neither of the footnotes provide any additional details on what part of that $4.1 million was due to a loss on the sale of the home and what part was relocation-related expenses. We know that Silicon Valley real estate has dropped sharply, but it’s still a hefty pot of money. There’s also an additional $1.2 million for a tax gross-up. After a quick skim of Microsoft’s filings, it’s pretty clear that this is the first time that Microsoft has disclosed this expense.
If the say-on-pay had been in place, you have to wonder how many investors would vote to spend that kind of money on relocating one executive.