Microsoft Corporate Benefits: Working at Microsoft

Apr 07, 2021 |

We’re proud to help employees understand their Microsoft corporate benefits.

Our guide to Microsoft corporate benefits has strategies and tips employees can use to take control of their financial future.

Our white paper covers 401(k), deferred compensation, health care, and insurance. It also covers Microsoft stock awards and Employee Stock Purchase Plan (ESPP) benefits.

Microsoft corporate benefits: stock awards

Stock awards allow Microsoft employees to take part in the company’s growth over time.

How It works

Microsoft typically grants stock awards in August of each year. New grants have vested five percent every three months (November, February, May, and August) over five years. Older grants have vested 10 percent every six months (February and August) over five years.

The taxable income is based on the stock’s fair market value at each vesting date. Stock awards allow Microsoft employees to take part in the company’s growth over time.

Financial strategies

Stock awards are an important part of many employees’ overall compensation packages. Most of the time, companies automatically withhold/sell shares at the time of the vest to account for taxes due at that time. Employees can sell “net shares” as they vest and use the proceeds for lifestyle expenses or to diversify their assets.

It is important for employees to note the amount of the withholding relative to their own effective tax rate, as it can be too little or too much depending upon their situation. Some employees will hold their shares, a common tactic for investors wanting to build a company stock position. However, it is important to recognize the potential risks that come with having too much concentration in one company.

Alternatively, employees can pay the required taxes to keep all their vested shares

Microsoft corporate benefits: Employee Stock Purchase Plan (ESPP)

Microsoft’s Employee Stock Purchase Plan allows employees to purchase additional Microsoft stock at a discounted price. This rate is usually 10 percent below the current market price based on the last day of the offering period.

ESPP: How It Works

Employees purchase stock via a payroll deduction between 1-15 percent of their compensation (maximum $25,000), which builds up between the offer date and the purchase date. On the purchase date, Microsoft uses the cash buildup to purchase the stock on the employees’ behalf.

ESPP: Financial Strategies

Employee stock purchase plans offer a way to make immediate profits. Employees can sell the stock instantly to capitalize on the discount.

To take advantage of preferential tax treatment on the gains, employees can hold their shares until they transition to long-term status (one year past the purchase date and two years past the beginning of the offering period).

Want to know more about Microsoft corporate benefits?

Download the white paper to optimize your benefits package: Your Guide to Microsoft Corporate Benefits

Let’s talk

Whether you have a specific question, or you’re interested in learning more about how our approach can be tailored to your situation, we’d love to hear from you.