Will Costly Options Hurt Facebook?

High valuation from MS could slow recruiting in Silicon Valley
By Colleen Barry,  Newser Staff
Posted Oct 28, 2007 10:16 PM CDT
Microsoft CEO Steve Ballmer smiles during a talk at the Web 2.0 conference in San Francisco, Thursday, Oct. 18, 2007. (AP Photo/Paul Sakuma)   (Associated Press)
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(Newser) – Microsoft's recently purchased stake in Facebook may make it harder for the social networking site to hire talented employees, reports the Wall Street Journal. By selling a 1.6% stake for $240 million, Facebook increased its valuation to $15 billion, in turn radically increasing the cost of stock options, which are a vital part of many Silicon Valley compensation packages.

Stock options allow employees to buy shares of their companies at a preset price; the lower the price, the greater the potential profit, and the more appealing they are as a non-cash part of a compensation package. The higher options price could hinder Facebook's plan to double its staff in the next year, although other companies valued in the billions have still managed attract new recruits.