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(MSFT) - Get Microsoft Corporation Report

one-of-a-kind employee stock option exchange program with

J.P. Morgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

prompted just slightly more than half of eligible staffers to trade in underwater options for cash.

In a filing with the

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Securities and Exchange Commission

Thursday, the world's largest software maker reported that J.P. Morgan paid Microsoft $382 million for 344.6 million options sold by 18,503 employees. That represented 55% of eligible options from 51% of Microsoft employees eligible to participate in the sale.

Microsoft plans to give about $218 million to employees as the initial payment for the options. The remainder will be doled out subject to continued employment of eligible employees.

Microsoft and J.P. Morgan created an undisclosed formula to calculate the price to pay employees for their options, based in part on the average of Microsoft's closing price over a 15-day so-called averaging period. Microsoft disclosed Thursday that the average price was $25.57 over the period from Nov. 14 to Dec. 8.

Shares of Microsoft were up 9 cents, or 0.3%, to $26.68 in recent trading.

Earlier this year, Microsoft announced its plan to let employees sell underwater options -- those with an exercise price higher than the market value of the stock -- to J.P. Morgan as part of a broader decision to replace employee stock options with restricted stock. Under the program, Microsoft allowed employees to sell options that have an exercise price of at least $33 a share and that expire on or after Feb. 29, 2004.

The unique program prompted criticism from Institutional Shareholder Services, a firm that advises institutional investors on corporate governance issues. ISS argued the options sale was a big enough change to the company's stock option program that it should have gone to a vote before shareholders.

Options with an exercise price of $33 were expected to be sold for about $2, while those with an exercise price of $45 could be sold for 25 cents, according to an email CEO Steve Ballmer sent to employees July 8, when the company's stock closed at $27.70. Based on the numbers released by Microsoft Thursday, employees received on average $1.11 per option.