Homebuyers who are worried they will lose their job after taking on a hefty mortgage can take out insurance policies that will cover their payments for a time if they become unemployed.
But what’s an executive who lands a high-paying job that forces him to relocate to do if he can’t sell his house for what he bought it for?
Microsoft Corp. doesn’t want such concerns standing in the way of its executive recruiting, revealing in a proxy statement that the company spent more than $7 million to help three executives relocate.
Those figures include expenses companies routinely incur in helping new hires move, such as travel and moving expenses.
But Microsoft also promised Stephen Elop, the new head of the company’s Microsoft’s business division, that it would buy his house from him at its appraised value.
If the appraised value came up short of what Elop paid for the home, plus the value of improvements he’d made to it, Microsoft said it would make up the difference.
As it turned out, "the price at which the house ultimately sold was significantly below Mr. Elop’s purchase price," Microsoft said in explaining the $4.15 million in relocation expenses the company racked up in moving Elop to Redmond, Wash.
Since the Internal Revenue Service considered some of that money taxable income, Microsoft also provided Elop with a "tax gross up" of $1.23 million. All told, it cost Microsoft $5.37 million to move Elop, the company said.
The company also disclosed that it had incurred $2.05 million in similar expenses in 2007 to relocate Chief Financial Officer Christopher Liddell, and $261,000 for Chief Operating Officer B. Kevin Turner’s move.
Liddell and Turner had to settle for a price equal to the average of three independent appraisals — Microsoft didn’t agree to make up the difference if the appraised value was less than they paid for their homes. But, as it turned out, Microsoft did end up paying more than the market would ultimately bear.
"Because (Liddell and Turner) were unable to sell the homes within a mutually agreed time, we resold these homes at our expense," Microsoft said.
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