Information Regarding Executive Officer Compensation
Cash Compensation
The following table discloses compensation received for the three fiscal years
ended June 30, 2001, by the Named Executive Officers.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
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Securities
Underlying All Other
Name and Principal Position Year Salary Bonus(1) Options (#) Compensation(2)
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Steven A. Ballmer 2001 $494,076 $171,444 - $ 5,100
Chief Executive Officer; 2000 428,414 200,000 - 5,100
Director 1999 388,392 272,181 - 4,800
William H. Gates 2001 494,992 171,762 - -
Chairman of the Board; 2000 439,401 200,000 - -
Chief Software Architect 1999 400,213 223,160 - -
Robert J. Herbold(3) 2001 626,250 400,000 - 57,512
Executive Vice President 2000 585,802 425,000 2,900,000 57,512
1999 562,465 363,693 - 50,997
Richard E. Belluzzo(4) 2001 468,758 350,000 1,500,000 1,651,700
President; Chief Operating Officer 2000 335,835 293,000 - 4,447,619
1999 n/a n/a n/a n/a
James E. Allchin 2001 419,576 275,000 1,000,000 3,200
Group Vice President, 2000 355,263 275,000 3,000,000 3,925
Platforms 1999 288,364 217,785 - 3,415
Jeffrey S. Raikes 2001 420,826 275,000 1,000,000 5,100
Group Vice President, 2000 370,991 258,500 3,000,000 5,250
Productivity and Business 1999 309,629 211,820 - 5,119
Services
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(1) The amounts disclosed in the Bonus column were all awarded under the
Company's Executive Bonus Plan.
(2) The amounts disclosed in the All Other Compensation column include Company
contributions under the Company's 401(k) plan, signing bonuses, relocation
and resettlement allowances, and life insurance and disability premiums.
(3) The All Other Compensation amounts disclosed for Mr. Herbold include $46,197
each year for life insurance premiums, $6,215 in 2001 and 2000 for
disability insurance premiums, and $5,100 in 2001 and 2000, and $4,800 in
1999 of Company contributions under the Company's 401(k) plan. Mr. Herbold
stepped down as the Company's Chief Operating Officer in February 2001.
(4) Mr. Belluzzo joined Microsoft in September 1999. The All Other Compensation
amounts disclosed for Mr. Belluzzo in 2001 include $1,643,700 required to be
accrued as compensation by generally accepted accounting principles in
connection with certain stock options granted to Mr. Belluzzo and $8,000 of
Company contributions under the Company's 401(k) plan. The All Other
Compensation amounts disclosed for Mr. Belluzzo in 2000 include a $4,200,000
signing bonus, $242,619 in relocation and resettlement allowances, and
$5,000 of Company contributions under the Company's 401(k) plan.
msft 5 2001 Proxy Statement
Compensation Pursuant to Stock Options
The following table sets forth information on option grants in fiscal 2001 to
the Named Executive Officers.
Option Grants in Last Fiscal Year
Individual Grants
-------------------------------------------------------------- Potential Realized Value at Assumed
Number of Percent of Annual Rates of Stock Price
Securities Total Options Appreciation for Option Term(2)
Underlying Granted to ----------------------------------------
Options Employees
Granted in Fiscal Expiration
Name (#)(1) Year ($/Share) Date 0% ($) 5% ($) 10% ($)
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Steven A. Ballmer - - - - - - -
William H. Gates - - - - - - -
Robert J. Herbold - - - - - - -
Richard E. Belluzzo 1,500,000 0.67 % $55.88 Feb, 2011 - 136,521,731 217,388,040
James E. Allchin 1,000,000 0.45 % $55.88 Feb, 2011 - 91,014,487 144,925,360
Jeffrey S. Raikes 1,000,000 0.45 % $55.88 Feb, 2011 - 91,014,487 144,925,360
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(1) All options listed were granted pursuant to the 2001 Stock Plan. Option
exercise prices were at the market price when granted. The options have a
term of 10 years and vest over 5 years. The exercise price and federal tax
withholding may be paid in cash or with shares of Microsoft stock already
owned.
(2) Potential realizable values are based on assumed annual rates of return
specified by the Securities and Exchange Commission. Microsoft management
has consistently cautioned shareholders and option holders that such
increases in values are based on speculative assumptions and should not
inflate expectations of the future value of their holdings.
msft 6 2001 Proxy Statement
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year-end Option
Values
The following table provides information on option exercises in fiscal 2001 by
the Named Executive Officers and the value of such officers' unexercised options
at June 30, 2001.
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal In-the-Money Options
on Value Year-End (#) at Fiscal Year-End ($)
Exercise Realized ------------------------------ ------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
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Steven A. Ballmer 0 0 0 - 0 -
William H. Gates 0 0 0 - 0 -
Robert J. Herbold 1,150,000 $67,186,938 750,000 2,725,000 $14,587,500 $32,075,781
Richard E. Belluzzo 0 0 553,572 4,446,428 2,062,503 38,062,497
James E. Allchin 580,000 33,203,158 490,000 4,070,000 29,412,742 28,192,188
Jeffrey S. Raikes 1,100,000 57,265,836 10,000 5,080,000 682,031 86,388,170
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Robert J. Herbold Employment Agreement
Mr. Herbold joined Microsoft in November 1994, and pursuant to his employment
agreement, he receives enhanced health and disability benefits during and after
his employment. Microsoft also maintains two life insurance policies of $650,000
and $1.35 million to replace policies he had from his previous employer.
If Mr. Herbold's employment is terminated for any reason other than
"misconduct" or voluntary resignation, Microsoft and Mr. Herbold will negotiate
in good faith a reasonable severance package with a minimum of 18 months' base
salary. For severance purposes, misconduct is limited to the commission of a
felony or any other intentional misconduct that has a material adverse effect
upon the business or reputation of Microsoft.
msft 7 2001 Proxy Statement
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