03/28/2008 02:45 am ET Updated May 25, 2011

As Facebook's Value Rises, Options, Top Talent Grow More Expensive

There is a little-noticed downside to Microsoft Corp.'s investment in Facebook Inc.: The deal will likely raise the price of stock options issued by the social-networking company and could make it more difficult to hire talented employees.

Last week, Facebook appeared to score a major victory when Microsoft said it would invest $240 million in the Palo Alto, Calif., start-up, in exchange for a 1.6% stake. The investment values Facebook at $15 billion, up significantly from last year when a financing round valued the company at $525 million, according to a person familiar with the matter. Microsoft's investment cemented Facebook's reputation as one of the hottest Web start-ups in Silicon Valley.

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