This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. Please read the entire Proxy Statement carefully before voting.
| Annual Shareholders Meeting | Meeting Agenda | ||
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| Date | December 2, 2015 |
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| Time | 8:00 a.m. Pacific Time | ||
| Place | Meydenbauer Center 11100 NE 6th Street Bellevue, Washington 98004 |
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| Record date | October 2, 2015 | ||
| Voting | Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. | ||
Voting matters and vote recommendation
| Vote in advance of the meeting | Vote in person | |||
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| Internet | Telephone | In person at the meeting | ||
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| Vote your shares at www.proxyvote.com. Have your Notice of Internet Availability or proxy card in hand for the 12-digit control number needed to vote. | Call toll-free number 1-800-690-6903. | Sign, date, and return the enclosed proxy card or voting instruction form. | See Part 5 – “Information about the meeting” for details on admission requirements to attend the Annual Meeting. | |
Our director nominees
See Part 2 – “Board of Directors” for more information.
The following table provides summary information about each director nominee. Each director is elected annually by a majority of votes cast.
Dr. Maria Klawe will not seek re-election at the 2015 Annual Meeting. Dr. Klawe currently serves on the Compensation Committee and Regulatory and Public Policy Committee. Sandra Peterson and Padmasree Warrior are both nominated for election to the Board at the Annual Meeting. The Board will consider committee appointments for Mmes. Peterson and Warrior once elected to the Board.
Corporate governance highlights
See Part 1 – “Corporate governance at Microsoft” for more information.
| Director independence | Experience | |
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| The Board and Board Committees |
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| Shareholder rights |
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| Shareholder outreach |
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| We maintain a vigorous shareholder engagement program. During fiscal year 2015, independent members of our Board and members of senior management conducted outreach to a cross-section of shareholders owning approximately 40% of our outstanding shares. |
Executive compensation matters
See Part 3 – “Named Executive Officer compensation” for more information.
| Business performance |
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During fiscal year 2015, we continued to refine our strategic focus, further streamlined our business, and achieved solid growth as we made progress in our ambition to be the productivity and platform company for a mobile-first and cloud-first world. We delivered innovation and remained disciplined in managing our operating expenses.
Our efforts to reduce our headcount and restructure our phone business unfavorably affected our profitability for the year, as evidenced by:
Excluding the impact of impairment, integration, and restructuring costs, our full year operating income and diluted earnings per share would have been $28.2 billion and $2.63, respectively, which were comparable to the prior year.¹ Other significant accomplishments during fiscal year 2015 included:
(1) See Annex A for a reconciliation of non-GAAP and GAAP measures presented. |
| Note about forward-looking statements |
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| This Proxy Statement includes estimates, projections and statements relating to our business plans, objectives and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including this Proxy Summary and Part 3 – “Named Executive Officer compensation.” These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties thatmay cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in Risk Factors,” “Quantitative and Qualitative Disclosures about Market Risk,” and “Management’s Discussion and Analysis sections of our Forms 10-K and 10-Q. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. |
Executive compensation advisory vote
Our Board of Directors recommends that shareholders vote to approve, on an advisory basis, the compensation paid to the Company’s named executive officers as described in this Proxy Statement (the “say-on-pay” vote), for the following reasons.
| Pay for performance |
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| Fiscal year 2015 executive compensation. Over 70% of fiscal year 2015 target compensation for our CEO and other named executive officers was paid through equity, providing direct alignment with returns to shareholders and incentives to drive long-term business success. The annual cash incentive awards for our named executive officers ranged from 100% to 130% of target and there were no special awards. The compensation package for our CEO is designed to motivate him to successfully implement our business transformation and create sustainable long-term value for shareholders by means of a long-term performance-based stock award. The one-time long-term award he received in February 2014 in connection with his promotion to CEO will provide equity compensation to Mr. Nadella if he successfully implements our business transformation, creates sustainable long-term value for shareholders, and as a result Microsoft performs well relative to the S&P 500 companies over the seven-year period. The evolution of executive compensation for fiscal year 2016 and beyond. In our 2014 Proxy Statement, we committed to developing long-term incentives for our executive officers that used performance measures aligned to the evolution of Microsoft’s business models and long-term objectives, and to implementing those arrangements as part of the senior executive compensation program in fiscal year 2016. As described in Part 3 – “Named Executive Officer compensation-The Evolution of Our Pay for Performance Philosophy,” our fiscal year 2016 Executive Officer Incentive Plan awards for Mr. Nadella and his senior leadership team include stronger, explicit ties to specific long-term performance objectives and over 90% of target annual compensation, on average, will be variable based on performance. Our say-on-pay vote in 2014, while passing, was lower than in previous years and not satisfactory to the Compensation Committee. These compensation changes respond to feedback we received through the say-on-pay vote and extensive shareholder engagement we conducted over the last year. |
| Sound program design | Best practices in executive compensation |
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| We designed our executive officer compensation programs to attract, motivate, and retain the key executives who drive our success and industry leadership while considering individual and Company performance and alignment with the interests of long- term shareholders. We achieve our objectives through compensation that: | Some of our leading practices include: |
| ✔ an executive compensation recovery policy, | |
| ✔ an executive stock ownership policy, | |
| ✔ provides a competitive total pay opportunity, | ✔ a policy prohibiting pledging and hedging ownership of Microsoft stock, |
| ✔ consists primarily of stock-based compensation, | ✔ no executive-only perquisites or benefits, |
| ✔ enhances retention through multi-year vesting of stock awards, and | ✔ no employment contracts or change in control protections, and |
| ✔ does not encourage unnecessary and excessive risk taking. | ✔ no supplemental executive retirement programs. |