Microsoft shares nosedive at start of trading

Microsoft shares were down as much as 17 cents at $27.53 within 40 minutes of trading today.

The Redmond, Washington-based company shocked the technology industry and Wall Street late Tuesday when it said that beginning in September it will give employees shares of Microsoft stock instead of options, a popular compensation tool for tech companies.

Vadim Zlotnikov, analyst with Sanford C Bernstein said: "This is going to cost Microsoft several billion dollars but even if it costs the company as much as $10bn (€8.82bn), I would see it as a positive.

"For $1 a share you're completely eliminating the burden of dilution of the stock options going forward."

This new plan is a major policy change to a stock-option based system that created thousands of millionaires at Microsoft alone.

It puts Microsoft at odds with Intel and other large tech companies that continue to defend options as the best way to motivate employees.