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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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March 31, 2008 3:42 PM

Microsoft employees buying fewer shares of company stock

Posted by Benjamin J. Romano

Today is one of four days each year that Microsoft employees can buy company stock at 90 percent of its fair-market value as part of the company's employee stock purchase plan. A report filed today on that plan shows that Microsofties have purchased fewer shares of company stock through the program per capita in each of the past two years.

(Update, Wednesday afternoon:
Note this post responding to readers who suggested a better way to evaluate the figures reported here.)

Microsoft shares closed at $28.38 today, up 47 cents, or 1.7 percent. For the first quarter of 2008, which ends today, Microsoft is down about 20 percent. The stock is up slightly from a year ago.

The company today filed details of its 2003 Employee Stock Purchase Plan with the SEC. Among other things, the filing reports the number of shares employees purchase through the plan in each of the past three years. (Recall that in July 2004, the company changed the discount granted to employees from 15 percent to 10 percent off market price, so fair comparisons can only be made starting with 2005 -- the first full year under the current terms of the plan.)

Here are the number of shares purchased through the plan, the number of employees Microsoft reported at June 30, and a rough estimate of shares purchased per employee for each year:

2007: 16,774,379 shares; 78,565 employees; 213.5 shares/employee.

2006: 17,288,724 shares; 71,172 employees; 242.9 shares/employee.
2005: 17,075,478 shares; 61,000 employees; 279.9 shares/employee.

So, in 2007, there were at least 7,393 more Microsoft employees (I say at least because the aQuantive acquisition closed after June 30, 2007, adding 2,600 more workers) than in 2006, yet, as a group, they bought 514,345 fewer shares. Granted, Microsoft's stock was trading higher for most of 2007 than it was in 2006. But as you can see, the trend extends back to 2006 vs. 2005.

Any employees want to chime in on why you're buying less company stock through the program?

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Posted by anonymous

7:04 PM, Mar 31, 2008

I'm a former Microsoft employee (left in 2006) and I used to always buy maximum company stock because you get an automatic 10% gain of your money invested within 0-3 months. I also always sold after the purchase went though to realize my gains and invested them elsewhere. I'm not sure why employees wouldn't take advantage of this.

I was however upset when Microsoft changed the ESPP plan to be the price at the ending of the period rather than the lower of either the beginning or end of the period. Because I realized at a MINIMUM of a 10% gain and in some cases could have been more if the stock ended higher than it started.

Posted by anonymous

4:24 PM, Apr 01, 2008

I'm not sure this article was very well researched. The author failed to determine the actual strike price for the espp purchases during these periods and these would have a significant impact on the average number of shares an employee could purchase. To agree with the previous post, I find it hard to believe that Microsoft employees would stop taking advantage of what is essentiall "free" money in significant numbers.

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