Stock Ownership and Holding Requirements for Microsoft Corporation Executives

Published: August 1, 2007

The Compensation Committee of the Board of Directors (“Compensation Committee”) believes that Microsoft Corporation (“Company”) executive officers should maintain a material personal financial stake in the Company to promote a long-term perspective in managing the enterprise and to align shareholder and executive interests. The Compensation Committee has adopted formal stock ownership and holding requirements whereby each executive officer is required to maintain the following minimum equity stake in the Company.

Role	Minimum ownership	Holding requirement
CEO and Executive Chairman	10x base pay	Each executive officer must retain 50 percent of all net shares (post tax) that vest on or after October 1, 2007, until the minimum share ownership requirement is achieved. If the executive officer is promoted to a position that has a higher ownership requirement, the higher standard will apply, and 50 percent of net vested shares should be retained until such time that the ownership requirement is met.
Division presidents and COO	5x base pay
Other Executive Officers	3x base pay

Minimum share ownership levels will be determined annually by using executive officer base pay multiples, base pay rate as of the end of the fiscal year (June 30), and the average daily closing share price of the 12 months ending on June 30. Each year in July, compliance with the requirements will be measured and executive officers will be notified about their ownership requirement, current holdings, and whether additional shares must be held.

For the purposes of determining ownership levels, the following forms of equity interests in the Company count toward the stock ownership requirement:

•
Shares held in a 401(k) plan
•
Shares held in trust for the economic benefit of the executive officer, or the spouse or dependent children of the executive officer
•
Shares held outright, whether acquired through open market purchase, vesting of Stock Awards or Shared Performance Stock Awards, or stock option exercise, or purchased through the Employee Stock Purchase Plan
Exceptions to these share ownership and holding requirements may be made at the discretion of the Compensation Committee if compliance would create severe hardship or prevent an executive officer from complying with a court order (as part of a divorce settlement, for example).

•	Shares held in a 401(k) plan
•	Shares held in trust for the economic benefit of the executive officer, or the spouse or dependent children of the executive officer
•	Shares held outright, whether acquired through open market purchase, vesting of Stock Awards or Shared Performance Stock Awards, or stock option exercise, or purchased through the Employee Stock Purchase Plan