<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MICROSOFT CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICROSOFT CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ________
(2) Aggregate number of securities to which transaction applies: ___________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:000/1/_______________________________
(4) Proposed maximum aggregate value of transaction: _______________________
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Filing Date:
- --------
/1/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
[LOGO OF MICROSOFT]
September 25, 1998
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Microsoft Corporation, which will be held at the Meydenbauer Center, 11100 NE
6th Street, Bellevue, Washington on November 11, 1998, at 8:00 a.m. I look
forward to greeting as many of our shareholders as possible. Please note that
parking is limited, so please plan ahead if you are driving to the meeting. We
will be providing overflow parking and shuttle buses at the Bellevue Square
shopping mall beginning at 7 a.m. Bellevue Square is located at the corner of
NE 8th Street and Bellevue Way, between NE 4th Street and NE 8th Street, and
is approximately 10 minutes from the Meydenbauer Center. You can enter the
parking area at the west entrance of the mall on West Drive. You will park and
board the buses near the Black Tie valet parking station near the Zoopa
Restaurant on West Drive.
Details of the business to be conducted at the annual meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you attend the annual meeting it is important that your
shares be represented and voted at the meeting. Therefore, I urge you to sign,
date, and promptly return the enclosed proxy in the enclosed postage-paid
envelope. If you decide to attend the annual meeting and vote in person, you
will of course have that opportunity.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company.
Sincerely,
/s/ Robert J. Herbold
Robert J. Herbold
Executive Vice President and Chief
Operating Officer
<PAGE>
MICROSOFT CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 11, 1998
To the Shareholders:
The annual meeting of the shareholders of Microsoft Corporation will be held
at the Meydenbauer Center, 11100 NE 6th Street, Bellevue, Washington, on
November 11, 1998, at 8:00 a.m. for the following purposes:
1. To elect directors.
2. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on September 11, 1998
are entitled to notice of, and to vote at, this meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ William H. Neukom
William H. Neukom, Secretary
Redmond, Washington
September 25, 1998
IMPORTANT
Whether or not you expect to attend in person, we urge you to sign, date,
and return the enclosed Proxy at your earliest convenience. This will
ensure the presence of a quorum at the meeting. PROMPTLY SIGNING, DATING,
AND RETURNING THE PROXY WILL SAVE THE COMPANY THE EXPENSES AND EXTRA WORK
OF ADDITIONAL SOLICITATION. An addressed envelope for which no postage is
required if mailed in the United States is enclosed for that purpose.
Sending in your Proxy will not prevent you from voting your stock at the
meeting if you desire to do so, as your Proxy is revocable at your option.
<PAGE>
MICROSOFT CORPORATION
ONE MICROSOFT WAY
REDMOND, WASHINGTON 98052
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD NOVEMBER 11, 1998
This Proxy Statement, which was first mailed to shareholders on September
25, 1998, is furnished in connection with the solicitation of proxies by the
Board of Directors of Microsoft Corporation (the "Company"), to be voted at
the annual meeting of the shareholders of the Company, which will be held at
8:00 a.m. on November 11, 1998, at the Meydenbauer Center, 11100 NE 6th
Street, Bellevue, Washington, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. Shareholders who execute proxies
retain the right to revoke them at any time prior to the exercise of the
powers conferred thereby, by delivering a signed statement to the Secretary of
the Company at or prior to the annual meeting or by executing another proxy
dated as of a later date. The cost of solicitation of proxies is to be borne
by the Company.
Shareholders of record at the close of business on September 11, 1998 will
be entitled to vote at the meeting on the basis of one vote for each share
held. On September 11, 1998, there were 2,484,635,670 shares of common stock
outstanding, held of record by 71,155 shareholders.
1. ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
Seven directors are to be elected at the annual meeting, to hold office
until the next annual meeting of shareholders and until their successors are
elected and qualified. It is intended that the accompanying proxy will be
voted in favor of the following persons to serve as directors unless the
shareholder indicates to the contrary on the proxy. Management expects that
each of the nominees will be available for election, but if any of them is not
a candidate at the time the election occurs, it is intended that such proxy
will be voted for the election of another nominee to be designated by the
Board of Directors to fill any such vacancy.
NOMINEES
William H. Gates, 42, was a founder of the Company and has been its Chief
Executive Officer and Chairman of the Board since the Company's predecessor
partnership was incorporated in 1981. From 1975 to 1981, Mr. Gates was a
partner with Paul Allen, Microsoft's other founder, in the predecessor
partnership. Mr. Gates is also a director of ICOS Corporation.
Paul G. Allen, 45, has been a director of the Company since 1990, and also
served on the Board from 1981 to 1984. Mr. Allen was a founder of the Company
and worked at Microsoft from 1975 to 1984. Mr. Allen owns and invests in a
suite of companies exploring the potential of multimedia digital
communications. His primary companies include Asymetrix Learning Systems,
Interval Research Corporation, Vulcan Northwest Inc., and Vulcan Ventures Inc.
He is also the owner of the Portland Trail Blazers basketball team and Seattle
Seahawks football team, a partner in the entertainment studio DreamWorks SKG,
and holds investments in more than 50 new media companies.
Jill E. Barad, 47, has been a director of the Company since 1996. Ms. Barad
has been the president and chief executive officer of Mattel, Inc. since
January 1997. Starting as a product manager at Mattel in 1981, she was named
executive vice president of marketing and worldwide product development in
1986 and, in 1989, president of the girls and activity toys division. In 1990
she was named president of Mattel USA and, in 1992, president and chief
operating officer of Mattel. Ms. Barad is also a director of Mattel, Inc. and
Pixar Animation Studios.
Richard A. Hackborn, 61, has been a director of the Company since 1994. Mr.
Hackborn retired in 1993 from Hewlett-Packard Company, which designs,
manufactures, and services electronic products and systems for
<PAGE>
measurement, computation, and communications, and currently serves on that
company's Board of Directors. From 1990 to 1993, he was Hewlett-Packard's
Executive Vice President, Computer Products Organization, and from 1984
through 1990, he was its Vice President and General Manager, Peripherals
Group.
David F. Marquardt, 49, has served as a director of the Company since 1981.
Mr. Marquardt is a founding general partner of August Capital, formed in 1995,
and has been a general partner of various Technology Venture Investors
entities, which are private venture capital limited partnerships, since August
1980. He is a director of Auspex Systems, Inc., Netopia, Inc., Visioneer,
Inc., and various privately held companies.
William G. Reed, Jr., 59, has been a director of the Company since 1987. Mr.
Reed served as Chairman of the Board of Simpson Timber Company, a forest
products company, from 1971 to 1986, and as Chairman of Simpson Investment
Company, from 1986 to July 1996. In addition to Simpson Investment Company, he
is a director of PACCAR, Inc., SAFECO Corporation, the Seattle Times Company,
and Washington Mutual Savings Bank.
Jon A. Shirley, 60, served as President and Chief Operating Officer of
Microsoft from 1983 to 1990. He has been a director of the Company since 1983.
Mr. Shirley also serves as Chairman of the Board of Directors of Mentor
Graphics Corporation.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
The Company's Board of Directors has an Audit Committee, a Compensation
Committee, and a Finance Committee. There is no standing nominating committee.
Messrs. Reed, Marquardt, and Shirley serve on the Audit Committee, which meets
with financial management, the internal auditors, and the independent auditors
to review internal accounting controls and accounting, auditing, and financial
reporting matters. Messrs. Hackborn and Reed and Ms. Barad serve on the
Compensation Committee, which reviews the compensation of the Chief Executive
Officer and other officers of the Company, reviews executive bonus plan
allocations, and grants stock options to officers and employees of the Company
under its stock option plan. Messrs. Hackborn, Marquardt, and Shirley serve on
the Finance Committee, which reviews and provides guidance to the Board of
Directors and management with respect to major financial policies of the
Company.
The Audit Committee and Compensation Committee each met four times during
fiscal 1998. The Finance Committee met three times. The entire Board of
Directors met four times during the last fiscal year. All directors attended
75% or more of the aggregate number of Board meetings and committee meetings.
Messrs. Gates and Allen receive no cash compensation for serving on the
Board except for reimbursement of reasonable expenses incurred in attending
meetings. Pursuant to agreements with the Company, the other five directors
are each paid $8,000 per year plus $1,000 for each Board meeting and $500 for
each committee meeting they attend. During fiscal 1998, Messrs. Allen,
Hackborn, Marquardt, Reed, and Shirley and Ms. Barad each received an annual
option to purchase 10,000 shares of the Company's common stock. The exercise
price of each option was the market price of Microsoft common stock on the
date of grant.
2
<PAGE>
INFORMATION REGARDING BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS, AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's common shares by the nominees for directors, the
Company's Chief Executive Officer and the four other highest paid executive
officers ("Named Executive Officers"), and the directors and executive
officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
OF COMMON SHARES AS
NAMES OF 9/11/98(1) PERCENT OF CLASS
----- -------------------- ----------------
<S> <C> <C>
William H. Gates...................... 515,777,800(2)(3) 20.8%
Paul G. Allen......................... 144,851,948(4) 5.8
Jill E. Barad......................... 42,000(5) *
Richard A. Hackborn................... 15,000 *
David F. Marquardt.................... 1,094,385(6) *
William G. Reed, Jr................... 927,188(7) *
Jon A. Shirley........................ 5,553,646(8) *
Steven A. Ballmer..................... 119,813,443(2) 4.8
Robert J. Herbold..................... 444,596(9) *
Paul A. Maritz........................ 1,701,333(10) *
Michel Lacombe........................ 1,470,404(11) *
Executive Officers and Directors as a
group (22 persons)................... 807,573,597(12) 32.3
</TABLE>
- --------
* Less than 1%.
(1) Beneficial ownership represents sole voting and investment power. To the
Company's knowledge, the only shareholders who beneficially owned more
than 5% of the outstanding common shares as of September 11, 1998, were
Messrs. Gates and Allen.
(2) The business address for Messrs. Gates and Ballmer is: Microsoft
Corporation, One Microsoft Way, Redmond, Washington 98052.
(3) Does not include 107,530 shares owned by Mr. Gates' wife, as to which he
disclaims beneficial ownership.
(4) Includes 630,000 shares that may be purchased within 60 days of
September 11, 1998, pursuant to outstanding stock options ("Vested
Options"). Mr. Allen's business address is: Vulcan Northwest Inc., 110--
110th Avenue N.E., Suite 550, Bellevue, Washington 98004.
(5) Includes 40,000 Vested Options.
(6) Includes 450,000 Vested Options.
(7) Includes 450,000 Vested Options.
(8) Includes 661,835 shares held by the Shirley Family Limited Partnership,
a limited partnership of which Mr. Shirley is the president of the sole
general partner, 50,560 shares held by Mr. Shirley as trustee under
trusts for two grandsons, and 450,000 Vested Options.
(9) Includes 440,000 Vested Options.
(10) Includes 1,687,000 Vested Options.
(11) Includes 570,000 Vested Options.
(12) Includes 12,930,200 Vested Options.
3
<PAGE>
INFORMATION REGARDING EXECUTIVE OFFICER COMPENSATION
CASH COMPENSATION
The following table discloses compensation received for the three fiscal
years ended June 30, 1998, by the Company's Chief Executive Officer and the
four other Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(#) COMPENSATION(2)
- --------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
William H. Gates........... 1998 $368,874 $173,423 0 0
Chairman of the Board; 1997 349,992 241,360 0 0
Chief Executive Officer;
Director 1996 340,618 221,970 0 0
Steven A. Ballmer.......... 1998 337,429 205,598 0 $4,800
President 1997 316,242 265,472 0 5,125
1996 271,869 212,905 0 4,875
Robert J. Herbold.......... 1998 535,773 572,317 0 76,833
Executive Vice President; 1997 536,127 673,096 0 50,094
Chief Operating Officer 1996 471,672 608,245 0 12,633
Paul A. Maritz............. 1998 311,223 205,215 0 5,025
Group Vice President, 1997 282,084 243,105 0 5,025
Platforms and Applications 1996 244,382 222,300 96,000 5,175
Michel Lacombe............. 1998 335,570 257,503 0 0
Senior Vice President,
Europe, Middle East, 1997 333,951 278,050 0 0
and Africa Region;
President, Microsoft 1996 301,101 169,520 360,000 0
Europe
</TABLE>
- --------
(1) The amounts disclosed in the Bonus column were all awarded under the
Company's Executive Bonus Plan, except the amounts disclosed for Mr.
Herbold include payments of $250,000 each year pursuant to a signing
bonus. See the description of Mr. Herbold's employment agreement below.
(2) The amounts disclosed in this column only include Company contributions
under the Company's 401(k) plan, except that for Mr. Herbold, it also
includes $4,758 in 1996, $45,344 in 1997, and $72,033 in 1998 for life
insurance premiums.
4
<PAGE>
COMPENSATION PURSUANT TO STOCK OPTIONS
No stock options were granted to any Named Executive Officers during fiscal
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1998
by the Named Executive Officers and the value of such officers' unexercised
options at June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED VALUE YEAR-END(#) AT FISCAL YEAR-END($)
ON EXERCISE REALIZED ------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
William H. Gates........ 0 0 0 0 0 0
Steven A. Ballmer....... 0 0 0 0 0 0
Robert J. Herbold....... 60,000 $ 3,011,250 465,000 775,000 $ 43,157,813 $71,929,688
Paul A. Maritz.......... 150,000 13,345,833 1,855,000 498,000 191,133,699 47,442,075
Michel Lacombe.......... 0 0 540,000 630,000 54,203,344 50,999,534
</TABLE>
ROBERT J. HERBOLD EMPLOYMENT AGREEMENT
Mr. Herbold joined Microsoft in November 1994. Microsoft offered him an
attractive compensation package in order to convince him to leave Procter &
Gamble after over 25 years at that company. He received $250,000 upon hiring,
and received $250,000 per year for three years, payable at each of the first
three anniversaries of his hire date. He received stock options for 1,300,000
shares when he joined the Company. He will not be eligible for additional
stock options until 1999. He receives enhanced health and disability benefits
during and after his employment. Microsoft agreed to purchase a $650,000 whole
life policy and a $1.35 million term life policy to replace policies he had at
P&G.
In the event Mr. Herbold's employment is terminated prior to the fourth
anniversary of his hire date, for any reason other than "Misconduct" or
voluntary resignation, Microsoft will provide him the following severance
benefits: (i) an immediate lump sum payment equal to the greater of (a) all
compensation that would have been paid to him if he had continued in
Microsoft's employ for four years following his hire date, or (b) the sum of
his annual base salary at the time of termination plus the Executive and Merit
Bonuses awarded to him for the most recently completed fiscal year, multiplied
by two; and (ii) immediate vesting of all unvested options under his 400,000-
share option (4 1/2-year vesting schedule) and immediate vesting of that
portion of his 900,000-share option (7 1/2-year vesting schedule) which would
have vested during the four years following his hire date. If Mr. Herbold's
employment is terminated after the fourth anniversary of his hire date, for
any reason other than Misconduct or voluntary resignation, the parties 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.
5
<PAGE>
REPORT OF THE MICROSOFT CORPORATION BOARD
OF DIRECTORS COMPENSATION COMMITTEE
Microsoft's employee compensation policy is to offer a package including a
competitive salary, an incentive bonus based upon individual performance
goals, competitive benefits, and an efficient workplace environment. The
Company also encourages broad-based employee ownership of Microsoft stock
through a stock option program in which all employees are eligible to
participate.
The Company's compensation policy for officers is similar to that for other
employees, and is designed to promote continued performance and attainment of
corporate and personal goals.
The Compensation Committee of the Board of Directors (comprised entirely of
non-employee directors) reviews and approves individual officer salaries,
bonus financial performance goals, bonus plan allocations, and stock option
grants. The Committee also reviews guidelines for compensation, bonus, and
stock option grants for non-officer employees.
Officers of the Company are paid salaries in line with their
responsibilities. These salaries are structured to be within the median range
of salaries paid by competitors in the computer and other relevant industries.
Competitors selected for salary comparison purposes differ from the companies
included in the Nasdaq Computer and Data Processing Stocks which is used in
the Performance Graph that follows this report. Officers also participate in
the Executive Bonus Plan. Each officer is eligible to receive a discretionary
bonus of up to 15% of base salary based upon individually established
performance goals. Officers are also eligible for financial performance
bonuses of up to 90% of base salary, with amounts based on a graduated formula
which takes into account predetermined corporate revenue and profit goals and,
in the case of officers with profit and loss responsibility, group revenue and
profit goals. The maximum total bonus under the Executive Bonus Plan is 105%
of base salary. The Compensation Committee establishes aggressive revenue and
profit goals as an incentive for superior individual, group, and corporate
performance. Likewise, stock option grants to officers (and other employees)
promote success by aligning employee financial interests with long-term
shareholder value. Stock option grants are based on various subjective factors
primarily relating to the responsibilities of the individual officers, and
also to their expected future contributions and prior option grants.
As noted above, the Company's compensation policy is primarily based upon
the practice of pay-for-performance. Section 162(m) of the Internal Revenue
Code imposes a limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to Named Executive Officers. The
Committee currently believes that the Company should be able to continue to
manage its executive compensation program for Named Executive Offers so as to
preserve the related federal income tax deductions.
The Compensation Committee annually reviews and approves the compensation of
William H. Gates, the Chief Executive Officer. Mr. Gates also participates in
the Executive Bonus Plan, with his bonus tied to corporate revenue and profit
goals, but does not participate in the individual performance portion of the
Executive Bonus Plan. His maximum possible bonus is 90% of his base salary.
The Committee believes Mr. Gates is paid a reasonable salary, and his bonus is
based on the same corporate financial goals as the other officers of the
Company. In addition, Mr. Gates is a significant shareholder in the Company,
and to the extent his performance as CEO translates into an increase in the
value of the Company's stock, all shareholders, including him, share the
benefits.
COMPENSATION COMMITTEE
Jill E. Barad
Richard A. Hackborn
William G. Reed, Jr.
6
<PAGE>
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MICROSOFT CORPORATION, NASDAQ C&DPS INDEX
AND S&P 500 INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period MICROSOFT NASDAQ S&P
(Fiscal Year Covered) CORPORATION C&DPS INDEX 500 INDEX
- --------------------- ----------- ----------- ----------
<S> <C> <C> <C>
Measurement Pt-00/00/1993 $100.00 $100.00 $100.00
FYE 06/30/1994 $117.00 $100.00 $101.00
FYE 06/30/1995 $205.00 $164.00 $128.00
FYE 06/30/1996 $273.00 $217.00 $161.00
FYE 06/30/1997 $574.00 $274.00 $217.00
FYE 06/30/1998 $985.00 $415.00 $282.00
</TABLE>
Note: Microsoft management consistently cautions that the stock price
performance shown in the graph above should not be considered indicative of
potential future stock price performance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Gates is the sole shareholder of Corbis Corporation, a company that
provides digitized images and production services. The Company paid Corbis
Corporation approximately $330,000 in the past fiscal year as licensing fees
for digital images.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Each of Michel Lacombe, Gregory Maffei and Orlando Ayala were late in filing
a Form 3 following their promotion to executive officers of the Company. Mr.
Ayala also filed a late Form 4 recording an exercise of stock options and the
sale of stock.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Board of
Directors of the Company. Proxies may be solicited by officers, directors, and
regular supervisory and executive employees of the Company, none of whom will
receive any additional compensation for their services. Also, W.F. Doring &
Co. may solicit
7
<PAGE>
proxies at an approximate cost of $12,500 plus reasonable expenses. Such
solicitations may be made personally, or by mail, facsimile, telephone,
telegraph, or messenger, or via the Internet. The Company will pay persons
holding shares of common stock in their names or in the names of nominees, but
not owning such shares beneficially, such as brokerage houses, banks, and
other fiduciaries, for the expense of forwarding solicitation materials to
their principals. All of the costs of solicitation of proxies will be paid by
the Company.
VOTING TABULATION
Vote Required: Under the Washington Business Corporation Act, the election
of the Company's directors requires a plurality of the votes represented in
person or by proxy at the meeting. Votes cast by proxy or in person at the
meeting will be tabulated by ChaseMellon Shareholder Services, L.L.C.
Effect of an Abstention and Broker Non-Votes: A shareholder who abstains
from voting on any or all proposals will be included in the number of
shareholders present at the meeting for the purpose of determining the
presence of a quorum. Abstentions will not be counted either in favor of or
against the election of the nominees or other proposals. Under the rules of
the National Association of Securities Dealers, brokers holding stock for the
accounts of their clients who have not been given specific voting instructions
as to a matter by their clients may vote their clients' proxies in their own
discretion.
AUDITORS
Representatives of Deloitte & Touche LLP, independent public auditors for
the Company for fiscal 1998 and the current fiscal year, will be present at
the Annual Meeting, will have an opportunity to make a statement, and will be
available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not intend to bring any other business before
the meeting, and so far as is known to the Board, no matters are to be brought
before the meeting except as specified in the notice of the meeting. However,
as to any other business that may properly come before the meeting, it is
intended that proxies, in the form enclosed, will be voted in respect thereof
in accordance with the judgment of the persons voting such proxies.
PROPOSALS OF SHAREHOLDERS
Shareholders who intend to have a proposal considered for inclusion in the
Company's proxy materials for presentation at the 1999 Annual Meeting of
Shareholders must submit the proposal to the Company no later than May 27,
1999. Shareholders who intend to present a proposal at the 1999 Annual Meeting
of Shareholders without inclusion of such proposal in the Company's proxy
materials are required to provide notice of such proposal to the Company no
later than August 10, 1999. The Company reserves the right to reject, rule out
of order, or take other appropriate action with respect to any proposal that
does not comply with these and other applicable requirements.
DATED: Redmond, Washington, September 25, 1998.
A COPY OF THE COMPANY'S FORM 10-K REPORT FOR FISCAL YEAR 1998, CONTAINING
INFORMATION ON OPERATIONS, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, IS AVAILABLE UPON REQUEST. PLEASE WRITE TO:
INVESTOR RELATIONS DEPARTMENT
MICROSOFT CORPORATION
ONE MICROSOFT WAY
REDMOND, WASHINGTON 98052
8
<PAGE>
MICROSOFT CORPORATION
PROXY
FOR ANNUAL MEETING OF THE SHAREHOLDERS OF MICROSOFT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM H. GATES and ROBERT J. HERBOLD, and
each of them, with full power of substitution, as proxies to vote the shares
which the undersigned is entitled to vote at the Annual Meeting of the Company
to be held at the Meydenbauer Center, 11100 NE 6th Street, Bellevue, Washington
on November 11, 1998 at 8:00 a.m. and at any adjournments thereof.
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
Please mark
your votes [X]
as indicated
This proxy when properly signed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
1. Election of directors: William H. Gates, Paul G. Allen, Jill E. Barad,
Richard A. Hackborn, David F. Marquardt, William G. Reed, Jr., and Jon A.
Shirley
FOR Election NOT FOR Election
of directors of directors
[ ] [ ]
Except vote withheld from following nominee(s) listed in space above.
-------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
IMPORTANT - PLEASE SIGN AND RETURN
PROMPTLY. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by an authorized person.
Signature Signature if held jointly Dated: , 1998
------------ ----------- -----
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Vote by Internet at the Internet address: http://www.eproxy.com/msft
--------------------------
OR
2. Mark, sign and date this proxy card and return promptly in the enclosed
envelope.
<PAGE>
MICROSOFT CORPORATION
PROXY
FOR ANNUAL MEETING OF THE SHAREHOLDERS OF MICROSOFT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM H. GATES and ROBERT J. HERBOLD, and
each of them, with full power of substitution, as proxies to vote the shares
which the undersigned is entitled to vote at the Annual Meeting of the Company
to be held at the Meydenbauer Center, 11100 NE 6th Street, Bellevue, Washington
on November 11, 1998 at 8:00 a.m. and at any adjournments thereof.
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
Please mark
your votes [X]
as indicated
This proxy when properly signed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
1. Election of directors: William H. Gates, Paul G. Allen, Jill E. Barad,
Richard A. Hackborn, David F. Marquardt, William G. Reed, Jr., and Jon A.
Shirley
FOR Election NOT FOR Election
of directors of directors
[_] [_]
Except vote withheld from following nominee(s) listed in space above.
-------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
IMPORTANT - PLEASE SIGN AND RETURN
PROMPTLY. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee, or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by President
or other authorized officer. If a
partnership, please sign in partnership
name by an authorized person.
Signature Signature if held jointly Dated: , 1998
------------ ----------- -----
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
Now you can vote your Proxy over
the Internet or by telephone!
It's fast, convenient, and your vote is immediately confirmed and
tabulated. Most important, by choosing either option, you help Microsoft
reduce postage and proxy tabulation costs.
OPTION 1: VOTE OVER THE INTERNET
1. Read the accompanying Proxy Statement.
2. Have your 12-digit control number located on your voting ballot available.
3. Point your browser to http://www.proxyvote.com
4. Follow the instructions. You will be given two choices:
You can simply cast your vote.
Or you can cast your vote and register to receive all future shareholder
communications electronically, instead of in print. This means that the
annual report, proxy, and any other correspondence will be delivered to you
electronically via e-mail.
OPTION 2: VOTE BY TELEPHONE
1. Read the accompanying Proxy Statement.
2. Have your 12-digit control number located on your voting ballot available.
3. Using a touch-tone phone, call the toll-free number shown on the voting
ballot.
4. Follow the recorded instructions.
Your vote is important!
Using the Internet or the telephone, you can vote anytime, 24 hours a day.
Or if your prefer, you can return the enclosed paper ballot in the envelope
provided.
Please do not return the enclosed paper ballot if you are voting by the
Internet or telephone.
msft
Microsoft Investor Relations
www.microsoft.com/msft/ [LOGO OF MICROSOFT]
<PAGE>
Now you can vote your Proxy
over the Internet!
It's fast, convenient, and your vote is immediately confirmed and
tabulated. Most important, by choosing to vote over the Internet, you help
Microsoft reduce postage and proxy tabulation costs.
HOW TO VOTE OVER THE INTERNET
1. Read the accompanying Proxy Statement.
2. Have your 11-digit control number located on your voting ballot available.
3. Point your browser to http://www.eproxy.com/msft
4. Follow the instructions. You will be given two choices:
You can simply cast your vote.
Or you can cast your vote and register to receive all future shareholder
communications electronically, instead of in print. This means that the
annual report, proxy, and any other correspondence will be delivered to you
electronically via e-mail.
Your vote is important!
Using the Internet, you can vote anytime, 24 hours a day.
Or if your prefer, you can return the enclosed paper ballot in the envelope
provided.
Please do not return the enclosed paper ballot if you are voting over the
Internet.
msft
Microsoft Investor Relations
www.microsoft.com/msft/ [LOGO OF MICROSOFT]
