PART IV - NAMED EXECUTIVE OFFICER COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis provides information about our fiscal year 2011 compensation program for our fiscal year 2011 Named Executive Officers:

• Steven A. Ballmer, our Chief Executive Officer (and our principal executive officer);

• Peter S. Klein, our Chief Financial Officer (and our principal financial officer);

• Kurt D. DelBene, our President, Microsoft Office Division;

• Steven J. Sinofsky, our President Windows and Windows Live Division; and

• B. Kevin Turner, our Chief Operating Officer.

The contents of this Compensation Discussion and Analysis are organized into three sections.

Section 1 – Performance and Pay

Section 2 – Compensation Setting Process and Decisions for Fiscal Year 2011

Section 3 – Other Compensation Policies and Information