Microsoft employees receive stock awards through two primary mechanisms: initial grants upon hiring and subsequent annual awards tied to performance. While the specific monetary value or share count of these awards varies based on factors like role, level, and performance, the manner in which they become fully owned by the employee—known as vesting—follows distinct schedules.
Types of Microsoft Stock Awards
1. On-Hire Stock Awards
Upon joining Microsoft, employees typically receive an initial stock award as part of their compensation package. These on-hire stock awards are designed to vest gradually over time, encouraging long-term commitment to the company.
- Vesting Schedule: These awards typically vest 25% per year.
- Vesting Start Date: The vesting period usually commences one year after the employee's start date.
2. Annual Stock Awards
Beyond the initial grant, Microsoft employees are eligible for additional stock awards on an ongoing basis. These awards are a result of their performance reviews and serve as a way to reward ongoing contributions.
- Eligibility: Employees become eligible for these additional stock awards following their annual performance review.
- Grant Timing: These performance-based awards are typically granted every August.
- Vesting Schedule: Annual stock awards typically vest 20% per year.
- Vesting Start Date: Vesting for these awards generally begins one quarter after the grant date.
Microsoft Stock Vesting Summary
To summarize the typical vesting schedules for Microsoft employee stock awards:
| Award Type | Vesting Percentage Per Period | Vesting Start Trigger |
|---|---|---|
| On-Hire Stock Award | 25% per year | 1 year after employee's start date |
| Annual Stock Award | 20% per year | 1 quarter after the award grant date |
These structured vesting schedules ensure that stock compensation serves as both a recruitment incentive and a mechanism for retaining talent and rewarding ongoing performance within the company.
