Microsoft restores $14.3M in stock awards to ex-Windows chief Sinofsky

Agreement bars ousted exec from working for unnamed rivals or criticizing company

Microsoft has reached an agreement with former Windows chief Steven Sinofsky, who was ousted from the company last November, that will award him stock worth more than $14 million, according to a filing with the U.S. Securities and Exchange Commission (SEC).

In return, the "Retirement Agreement" briefly described in the Form 8-K dated July 3 binds Sinofsky to a non-compete clause and demands he "not disparage Microsoft."

For those and other considerations, Sinofsky will receive more than 418,000 shares of Microsoft stock, which at Friday's market close were worth $14.3 million. The value could, depending on Microsoft's stock performance, be worth more or less than that when they vest, which will take place in several installments through August 2016.

Until his sudden departure Nov. 12, 2012, Sinofsky was Microsoft's top Windows executive; Just weeks before, he had helped launch Windows 8, sharing a stage with CEO Steve Ballmer. Although both Microsoft and Sinofsky cast his exit as a mutual decision, outside analysts believed that there was much more at play, likely a clash between Sinofsky and Ballmer with inside-the-company politics and personalities at its root.

When he departed Microsoft, Sinofsky left several hundred thousand shares on the table, including 220,636 that represented the stock portion of his fiscal year 2013 incentive compensation. Those shares were to vest over a four-year span, with the first 25% set to be his next month. However, the shares were, as with all such awards, contingent on continued employment.

Also gone was the bulk of his fiscal year 2012 bonus, more than 260,000 shares, which were also to vest over a four-year stretch.

The agreement reinstated the bulk of those awards. "In return for the performance of his obligations under the Retirement Agreement, Microsoft will pay the value of his outstanding unvested stock awards granted prior to fiscal year 2013 and 50% of the shares of stock awarded for his performance during fiscal year 2013," the filing stated.

Last week's agreement will add to the 647,515 shares Sinofsky held as of mid-September 2012, the last time Microsoft reported his holdings before his exit. If he has not sold any of those shares -- and does not before the final vesting in three years -- Sinofsky's portfolio of Microsoft shares would be worth an estimated $36.5 million at Friday's close price.

Along with the non-competition clause, which forbids Sinofsky from joining "certain competitors" -- those were not identified in the SEC filing -- he also agreed to "a release of claims against Microsoft and its related parties," hinting that he had actively pursued restoration of his bonus-based stock grants.

When Sinofsky left Microsoft, Baller appointed Tami Reller, the Windows division's CFO, and Julie Larson-Green, a long-time Sinofsky lieutenant, to co-lead the important OS group.

Rumors have swirled for the last several weeks about an impending corporate reorganization at the Redmond, Wash. company, which may be announced this week. After the unexpected decampment July 1 of Don Mattrick, head of Microsoft's Xbox division, Larson-Green has emerged as the front-runner to lead the hardware side of Microsoft, with responsibilities for the Surface line of tablets as well as the game console.

Reller, meanwhile, was reportedly a candidate for the company's top financial position who lost out to Amy Hood. In May, Hood was named corporate CFO to replace Peter Klein. Although Reller and Larson-Green both participated in a short public relations blitz in May to trumpet the then-pending Windows 8.1 upgrade, Reller did not participate in the keynote addresses at Microsoft's BUILD developers conference last month. Instead, Larson-Green took the BUILD stage to pitch Windows 8.1.

Earlier this year, Sinofsky was an executive in residence at the Harvard Business School. He continues to write about product management, development and release practices on his personal blog, "Learning by Shipping."

In that blog, Sinofsky has been careful not to sling mud at Microsoft, or even mention it in more than passing. And at the May conference hosted by the Wall Street Journal's AllThingsD blog, Sinofsky evaded questions when he was asked why Windows 8 had not done better out the gate.

During that May interview, Sinofsky also said, "I love Microsoft. I love the people, the leadership."

That love may have brought him an extra $14 million.

This article, Microsoft restores $14.3M in stock awards to ex-Windows chief Sinofsky, was originally published at Computerworld.com.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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