What does this filing cover?

This is Amendment No. 1 to the fiscal 2003 annual report on Form 10-K. It supplies Part III information on executive and director compensation and lists exhibits, including a stock option agreement with Jonathan J. Ledecky and officer certifications. The filing itself does not include financial statements or business results.

How much were the top executives paid in 2003?

Michael J. Saylor, Chairman and CEO, received a salary of $375,000 and a bonus of $532,889. Sanju K. Bansal, Vice Chairman, Executive Vice President and COO, received a salary of $200,000 and a bonus of $284,207. Eric F. Brown, President and CFO, received a salary of $250,000 and a bonus of $213,155.

What stock options were granted to executives in 2003?

On February 8, 2003, Saylor was granted 410,000 options and Bansal 100,000 options, each at $20.69 per share, expiring February 8, 2013. Brown, Klein, Bedell and Sanchez were each granted 50,000 options at the same price. The options vest over five years.

How are outside directors compensated?

Outside directors receive a $15,000 annual retainer and $3,750 per in-person board meeting. Audit Committee members receive $1,000 per in-person committee meeting, and committee chairpersons receive a $7,500 annual retainer and $1,875 per meeting. Directors also receive initial option grants of 17,000 shares, plus an additional 8,000 shares for committee chairpersons, subject to a 25,000-share cap.

Do executives have employment agreements or change-in-control protections?

The filing states that most employees are not subject to written employment agreements, though they sign confidentiality agreements and offer letters. Certain officers granted options in July 2002 have change-in-control provisions: at least 50% of the grant vests upon a change in control, the remainder vests over the following six months, and all options vest in full if the officer is terminated without cause or resigns for good reason afterward.

Strategy 10-K FY2003 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K/A filed May 26, 2004. Cited figures are marked; the original filing is the authoritative source.

This Amendment No. 1 to MicroStrategy Incorporated's Form 10-K for the fiscal year ended December 31, 2003 is a Part III filing that supplements the original annual report.

It was filed May 26, 2004, and contains only executive compensation disclosure, director compensation, employment-related arrangements, and a short list of exhibits. It does not contain financial statements, business description, or results of operations. The filing's compensation tables cover the chief executive officer and five other most highly compensated executive officers for fiscal 2003.

Michael J. Saylor, Chairman and CEO, received a salary of $375,000^a and a bonus of $532,889 in 2003, and was granted options on 410,000 shares at an exercise price of $20.69. The filing states the Class A common stock closed at $52.48 on December 31, 2003, and that aggregate market value held by non-affiliates was approximately $381.9 million as of June 30, 2003.

As of March 1, 2004, there were 12,431,663 Class A and 3,603,730 Class B shares outstanding. For investors, the main takeaways are the scale of option grants to executives in 2003, the change-in-control vesting provisions for certain executives granted options in July 2002, and the director compensation structure, which includes annual retainers and per-meeting fees.

The filing also attaches a stock option agreement with former director Jonathan J. Ledecky and two officer certifications.

02—Key points

Key Highlights

Filing type: Amendment No. 1 to the 10-K for fiscal year 2003, covering Part III (executive and director compensation) and Part IV (exhibits) only.
Michael J. Saylor, Chairman and CEO, received a 2003 salary of $375,000, a bonus of $532,889, and an option grant of 410,000 Class A shares at $20.69 per share, which the filing says is 39.5% of total options granted to employees in 2003.
Eric F. Brown, President and CFO, received a 2003 salary of $250,000, a bonus of $213,155, and an option grant of 50,000 shares at $20.69.
The filing states the Class A common stock closed at $52.48 on December 31, 2003, on the Nasdaq National Market.
Aggregate market value of non-affiliate voting stock was approximately $381.9 million as of June 30, 2003; 12,431,663 Class A and 3,603,730 Class B shares were outstanding as of March 1, 2004.
Outside directors receive a $15,000 annual retainer, $3,750 per quarterly board meeting attended in person, and option grants of 17,000 shares upon initial election (with additional 8,000-share chairperson options, capped at 25,000 total).
Certain officers granted options in July 2002 have change-in-control acceleration: at least 50% vests at the change in control, with the remainder vesting over six months, and full vesting upon termination without cause or for good reason.

03—Questions

Frequently Asked Questions

What does this filing cover?
This is Amendment No. 1 to the fiscal 2003 annual report on Form 10-K. It supplies Part III information on executive and director compensation and lists exhibits, including a stock option agreement with Jonathan J. Ledecky and officer certifications. The filing itself does not include financial statements or business results.
How much were the top executives paid in 2003?
Michael J. Saylor, Chairman and CEO, received a salary of $375,000 and a bonus of $532,889. Sanju K. Bansal, Vice Chairman, Executive Vice President and COO, received a salary of $200,000 and a bonus of $284,207. Eric F. Brown, President and CFO, received a salary of $250,000 and a bonus of $213,155.
What stock options were granted to executives in 2003?
On February 8, 2003, Saylor was granted 410,000 options and Bansal 100,000 options, each at $20.69 per share, expiring February 8, 2013. Brown, Klein, Bedell and Sanchez were each granted 50,000 options at the same price. The options vest over five years.
How are outside directors compensated?
Outside directors receive a $15,000 annual retainer and $3,750 per in-person board meeting. Audit Committee members receive $1,000 per in-person committee meeting, and committee chairpersons receive a $7,500 annual retainer and $1,875 per meeting. Directors also receive initial option grants of 17,000 shares, plus an additional 8,000 shares for committee chairpersons, subject to a 25,000-share cap.
Do executives have employment agreements or change-in-control protections?
The filing states that most employees are not subject to written employment agreements, though they sign confidentiality agreements and offer letters. Certain officers granted options in July 2002 have change-in-control provisions: at least 50% of the grant vests upon a change in control, the remainder vests over the following six months, and all options vest in full if the officer is terminated without cause or resigns for good reason afterward.

04—Continue

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