Summary
Microsoft Corporation (MSFT) filed an 8-K on September 25, 2008, detailing changes to its executive compensation and corporate governance. The Compensation Committee approved a new executive officer incentive plan, effective for fiscal year 2009, which replaces existing bonus and equity award programs. This new plan ties awards to corporate operating income and introduces specific limits on both the total incentive pool and individual executive payouts, potentially offering a more performance-driven compensation structure.
Key Highlights
- 1New executive officer incentive plan approved for fiscal year 2009, replacing prior bonus and equity award programs.
- 2Executive awards will be funded from an incentive pool capped at 0.35% of fiscal year 2009 corporate operating income.
- 3Maximum payout to a single executive officer for one or more performance periods ending in a fiscal year is capped at $20,000,000.
- 4Awards can be made in cash or stock, with stock awards subject to vesting determined by the Compensation Committee, typically over at least three years.
- 5Amendments to the Company's bylaws, effective September 19, 2008, enhance requirements for shareholder advance notice for director nominations and proposals.
- 6The amendments are intended to provide the Company with more time to review and respond to shareholder proposals before annual meetings.
Frequently Asked Questions
The Compensation Committee has approved a new executive officer incentive plan for fiscal year 2009. This plan replaces the existing annual cash bonus and equity award programs, aiming to align executive pay more closely with company performance.
The incentive pool for fiscal year 2009 is capped at a maximum of 0.35% of Microsoft's corporate operating income for that year. Individual executive awards are further limited, with a maximum payout of $20,000,000 to any single executive for performance periods ending within a fiscal year.
The Company's bylaws were amended to implement stricter requirements for shareholders wishing to nominate directors or present proposals at annual meetings. This includes providing advance notice and additional information, giving the company more time to prepare.
The new executive officer incentive plan is effective beginning with fiscal year 2009. The amendments to the bylaws were effective as of September 19, 2008.