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Transferable Stock Options (Tsos) And The Coming Revolution In Equity-Based Pay


  • Brian J. Hall


The dominant form of equity pay in the U.S. will change dramatically when accounting rules are changed (most likely in 2005) to require companies to charge the cost of their stock option plans on their income statements. Many companies are already switching from stock options to other forms of equity pay, especially restricted stock. The most notable switcher was Microsoft, the world's largest user of stock option pay. In July 2003, partnering with J.P. Morgan, Microsoft created a onetime transferable stock option (TSO) program that allowed holders of underwater Microsoft options to sell their options to J.P. Morgan in return for restricted shares. 2004 Morgan Stanley.

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  • Brian J. Hall, 2004. "Transferable Stock Options (Tsos) And The Coming Revolution In Equity-Based Pay," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(1), pages 8-17.
  • Handle: RePEc:bla:jacrfn:v:16:y:2004:i:1:p:8-17

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    References listed on IDEAS

    1. René M. Stulz, 1996. "Rethinking Risk Management," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(3), pages 8-25.
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    Cited by:

    1. Sautner, Zacharias & Weber, Martin, 2005. "Stock Options and Employee Behavior," Sonderforschungsbereich 504 Publications 05-26, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    2. Chance, Don M., 2009. "Liquidity and employee options: An empirical examination of the Microsoft experience," Journal of Corporate Finance, Elsevier, vol. 15(4), pages 469-487, September.

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