Employee Stock Options at Microsoft Corporation

18 Pages Posted: 21 Oct 2008

See all articles by Richard Brownlee

Richard Brownlee

University of Virginia - Darden School of Business

Luann J. Lynch

University of Virginia - Darden School of Business

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Abstract

This case requires students to prepare an analysis of Microsoft Corporation's financial statements and footnotes to understand the impact of its use of stock options. In addition to a general analysis of Microsoft's use of stock options and their impact on the financial statements, students focus more specifically on Microsoft's April 2000 megagrant of 70 million options after a substantial decline in Microsoft's stock price. The primary issues that students must explore are (1) the differences in financial reporting under the intrinsic-value and fair-value methods, (2) the effect of stock options on the company's financial statements, (3) the income tax benefit from stock options, and (4) the net cost or benefit to Microsoft from granting stock options.

Keywords: accounting, inflation, compensation, employee, stock dividends

Suggested Citation

Brownlee, Richard and Lynch, Luann J., Employee Stock Options at Microsoft Corporation. Darden Case No. UVA-C-2154, Available at SSRN: https://ssrn.com/abstract=1276599

Richard Brownlee (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4800 (Phone)

HOME PAGE: http://www.darden.edu/faculty/Brownlee.htm

Luann J. Lynch

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4721 (Phone)
434-243-7677 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/lynch.htm

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