Summary
Microsoft Corporation (MSFT) filed an 8-K on November 21, 2005, to report amendments to its Deferred Compensation Plan, effective January 1, 2006. These changes are primarily driven by new Internal Revenue Service guidance and aim to broaden the plan's appeal and functionality. The amendments introduce significant shifts, including the ability for eligible employees to defer base salary and other compensation types, beyond just bonuses. However, a key change is the elimination of the ability to defer stock option gains. These adjustments are intended to ensure compliance with tax regulations while adapting the compensation structure to potentially offer more flexibility to a wider range of employees, albeit with a reduced focus on stock option deferrals.
Key Highlights
- 1Microsoft amended its Deferred Compensation Plan (formerly the 1998 Stock Option Gain and Bonus Deferral Program) on November 15, 2005.
- 2The amendments are effective for compensation earned on or after January 1, 2006.
- 3The plan was updated to comply with recent guidance from the Internal Revenue Service.
- 4The class of eligible employees for the plan has been expanded.
- 5Participants can now defer base salary and certain other compensation types, in addition to bonuses.
- 6A significant change is the elimination of the ability to defer stock option gains under the revised plan.
- 7The distribution provisions of the plan have also been revised.