updated 11/9/2004 1:44:41 PM ET 2004-11-09T18:44:41

Microsoft Corp. shareholders on Tuesday approved changes to the company’s stock compensation plans, clearing the way for the software giant to award a one-time, $3-per-share dividend that will cost the company an estimated $32 billion. (MSNBC is a Microsoft-NBC joint venture.)

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The dividend is part of Microsoft’s plans to give a substantial portion of its accumulating cash back to investors. Its cash holdings are about $64 billion, and growing.

The dividend will be paid Dec. 2 to shareholders of record Nov. 17.

The company wasn’t willing to hand out the cash unless shareholders approved changes to its stock compensation plans, so employees who hold stock options and stock awards wouldn’t be hurt by the dividend payout.

A one-time dividend could hurt people holding stock options or stock grants because the stock price can be expected to fall by the amount of the dividend. For shareholders, that drop is offset by the dividend itself, but people who hold only grants or options don’t get the dividend.

To make up for that loss, Microsoft asked shareholders for permission to employ a formula that would decrease the strike price — the price at which stock can be bought at a certain point in the future — of employees’ options while also increasing the number of options the employee receives. Microsoft recently switched from offering stock options to stock grants; employees who hold stock grants would simply see the amount of the stock grant increased to counterbalance the expected stock price drop.

Shareholder Janet Gilkey, 61, of Seattle, said she was concerned about the effect of giving employees more shares than they previously had. But in the end, she voted for the change to the stock plan because she thought the dividend was worth it.

“It’s a positive thing for shareholders,” Gilkey said.

Chairman Bill Gates has said he plans to give his share of the one-time payout, which amounts to about $3 billion, to the Bill & Melinda Gates Foundation, his philanthropic organization.

Microsoft executives were peppered with questions from shareholders about the stock price at Tuesday’s annual meeting in suburban Bellevue, near the company’s Redmond headquarters.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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