Microsoft Pays Executive $14 Million To Not Work for the Competition for a Year

[dgstorm]

Here's a story that proves some folks just live in a completely different world than the rest of us. Last November, Lead Windows exec, Steven Sinofsky resigned (was indirectly pushed out) from Microsoft. At the time of his departure, Microsoft gave him a generous exit bonus of $14 Million in stock options, which he would have vested if he had stayed with the company. This also happened to be a "non-compete" payoff agreement.

Microsoft effectively paid Sinofsky $14 Million to simply NOT work at their seven biggest competitors: Amazon, Apple, EMC, Facebook, Google, Oracle & VMWare. This agreement ends on December 31st, 2013, at which time he can then work for any of these companies. The other stipulation was that he could not disparage Microsoft, nor solicit Microsoft employees for work at other companies. He was also restricted from encouraging Microsoft customers to choose competitors’ products.

So, basically Microsoft wasn't too thrilled with his performance, and didn't offer him the promotion he wanted. They knew he wouldn't like this, thus facilitating his voluntary resignation. In the end, they basically gave him $14 Million in stock options for him to sit on his butt for a year before he can go work for their competitors. The average joe is lucky to get a one month severance package while being escorted to the door by security.

This is pretty standard stuff in silicon valley, and we have heard stories like this before. Still, it's interesting to see the details on the numbers involved in agreements like this.

It appears that some parachutes really are made of gold.

Source: AllThingsD

 

[johnomaz]

Its very common practice...well, common practice for high up execs. The amount is crazy, but I've seen higher.

 

[acousticshade]

The sad thing is that there are probably thousands of people who could do his job for a lot less money that will never get the chance.

 

[artvandelay440]

I wish I could find a Microsoft joke to make here, but sadly, it's par for the course at that level. Meanwhile, a lot of more qualified candidates sit unemployed.

 

[KaChow]

This really happens all the time, it is stomach turning to think that some Exec is getting paid $14m to sit on his couch. But at the same time the $14m is a drop in the bucket and not a total loss for Microsoft, which the non-compete is nothing out of the ordinary. My guess is also that Microsoft is gaining by no longer having Sinofsky sit at his desk (probably hired a replacement Exec for 1/3 of the pay claiming that we are in slow economy), and certainly having Sinofsky binded from not only seeking other employment at companies that would possibly pay him much more than $14m for internal secrets he knows at MS, not to mention the Sinofsky's "team" of employees that he knows at MS and he cannot have any contact with those people. Believe me Microsoft has a strong hold over that $14m in options, that Sinofsky cannot cash out on just yet. With these large corporations, and with Non-Competes you so much as say hello to a former employee on the street that you directly or indirectly supervised, the corporation will take you to court and fight you for your loss. I really disagree with the concept of Non-Competes, it is difficult those that build a strong career in an industry, where a large corporation binds you into an agreement and most often forces you to either accept a Non-Compete or find another job.

 

[jspradling7]

If they're just options then they aren't worth 14 million are they? At some future date he has the "option" to take possession of 14 million dollars of MS stock at a pre-set price and then immediately sell them for a profit if the current market value is higher than the pre-set price was. So let's say he chooses to take possession next year and sells them for 15 million. His golden parachute is worth 1 million less taxes. If they gave him 14 mil is stock that would be different.

 

[Narsil]

...good work if you can get it.