Microsoft Elects Board of Directors and Announces Committee Changes

REDMOND, Wash., Nov. 11, 2003 — Microsoft Corp. today announced that shareholders have approved the addition of two new directors, Charles H. Noski and Helmut Panke, increasing the size of its board of directors from eight to 10 members, broadening the business management and financial expertise of the board, and allowing better distribution of responsibility among directors. The company also outlined new committee assignments for the expanded board, which will provide strong director focus by limiting each director to serving on one or two committees.

“We are delighted that shareholders approved the addition of Dr. Panke and Mr. Noski to the board of directors,” said Bill Gates, chairman and chief software architect at Microsoft. “The expansion of the board and realignment of the committees further emphasizes our commitment to strong corporate governance.”

The board has five committees: an Audit Committee, a Compensation Committee, a Finance Committee, a Governance and Nominating Committee, and an Antitrust Compliance Committee. Under the new committee structure, the Audit Committee members are James I. Cash Jr., Wm. G. Reed Jr. (chairman) and Noski. The Compensation Committee members are Ann Korologos (chairman), Reed and Panke. The Finance Committee members are David F. Marquardt, Jon A. Shirley (chairman) and Noski. The Governance and Nominating Committee members are Raymond V. Gilmartin (chairman) and Marquardt. The Antitrust Compliance Committee members are Cash (chairman), Gilmartin and Korologos.

In addition, at the annual shareholder meeting, the following proposals were acted on by the company’s shareholders.

  • Amendments to the 2001 Stock Plan were approved, facilitating the company’s recent move to an equity compensation program using restricted stock grants to employees rather than stock options, and reducing the total number of shares available for equity compensation.

  • Amendments to the 1999 Stock Option Plan for non-employee directors were approved, authorizing the company to compensate its non-employee directors with restricted stock grants going forward, instead of stock options.

  • A shareholder proposal requesting the company refrain from making direct charitable contributions was voted down.

Microsoft’s board of directors includes William H. Gates, chairman and chief software architect at Microsoft; Steven A. Ballmer, chief executive officer of Microsoft; James I. Cash Jr., Ph.D., former James E. Robison professor at the Harvard Business School; Raymond V. Gilmartin, chairman, president and chief executive officer of Merck & Co. Inc.; David Marquardt, general partner at August Capital; Ann McLaughlin Korologos, chairman emeritus of The Aspen Institute and senior advisor at Benedetto, Gartland & Company Inc.; Wm. G. Reed Jr., former chairman of Simpson Investment Co.; Jon Shirley, former president and chief operating officer of Microsoft; Dr. Helmut Panke, chairman of the board of management at BMW Bayerische Motoren Werke AG; and Charles H. Noski, former vice chairman of AT & T Corp. and newly appointed corporate vice president and chief financial officer of Northrop Grumman Corporation (effective December 2003). Eight of the 10 board members are independent, consistent with the requirement in the company’s governance guidelines that a majority must be independent.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software –any time, any place and on any device.

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