Microsoft’s game of bait and switch and switch

Chances are you’ve already heard about Microsoft’s big earnings report yesterday. The headline on the press release that came out following Thursday’s market close proudly hailed that “Microsoft delivers record third-quarter revenue and earnings per share”. That same release — and to be fair, the headline following the record earnings — noted that CFO Peter Klein would be stepped down by the end of the fiscal year.

That was the first bait and switch: upbeat earnings combined with the announcement of the CFO stepping down. And that’s how all of the news stories we saw have played it (see here and here, for example).

But we were more interested in this 8-K that Microsoft filed an hour later, right around the time the earnings call wrapped up. In that filing, Microsoft provided some details on what Klein would be getting when he stepped down: $1 million in Jan. 2014 and a second payment of $1 million in June 2014. Here’s the entire agreement, which is actually pretty concise as these sorts of things go. While we were really hoping that the agreement would spell out that Klein got to keep several non-Microsoft devices (as we’ve footnoted before, iPhones and iPads are very popular parting gifts) there was nothing like that in the agreement.

Needless to say, the details about Klein’s $2 million separation payments were not in either the earnings announcement or the conference call. In our book, that’s a bait and switch and switch.