Summary
Microsoft Corporation (MSFT) announced on January 16, 2006, significant modifications to the compensation structure for its non-management directors. This filing (8-K) details a new annual retainer of $200,000, with a substantial portion, approximately $120,000, to be paid in the form of stock awards under the company's existing stock plan for directors. This move emphasizes a greater alignment of director compensation with shareholder interests through increased equity ownership. Further details of the updated compensation include additional annual retainers for committee chairs ($10,000) and Audit Committee members ($10,000), along with reimbursement for board-related expenses. Additionally, Microsoft's Board of Directors has increased the stock ownership guideline for directors to three times the base annual retainer amount, reinforcing the commitment to long-term value creation. A new deferred compensation plan was also approved, offering directors flexibility in managing their compensation by deferring cash and equity awards.
Key Highlights
- 1New annual retainer for non-management directors increased to $200,000.
- 2Approximately $120,000 of the annual retainer will be paid in stock awards.
- 3Directors' stock ownership guidelines increased to three times the base annual retainer.
- 4Additional annual retainers of $10,000 for committee chairs.
- 5Additional annual retainers of $10,000 for Audit Committee members.
- 6Reimbursement for reasonable board-related expenses is provided.
- 7A new deferred compensation plan allows directors to defer cash and equity compensation.