Kindly assist on this question.

Over the course of Microsoft?s history, the board has developed corporate governance practices to help it fulfill its responsibilities to shareholders to oversee the work of management and the company?s business results. The governance practices are memorialized in these guidelines to assure that the board will have the necessary authority and practices in place to review and evaluate the company?s business operation as needed and to make decision that are independent of the company?s management. The guidelines are also intended to align the interests of directors and management with those of Microsoft?s shareholders.

The guidelines are subject to future refinement or changes as the board may find necessary or advisable for Microsoft in order to achieve these objectives.

Board composition and selection: independent Directors

1. Board Size: The board believes 8 to 10 is an appropriate size based on the company?s present circumstances. The board periodically evaluates whether a larger or smaller slate of directors would be preferable

2. Selection of Board members: All members are elected annually by the company?s shareholders, except as noted below with respect to vacancies.

The board may fill vacancies in existing or new directors? positions.

3) Board membership criteria: The governance and nominating committee works with the board on the annual basis to determine the appropriate characteristics, skills and experience for the board as a whole and its individual board members, the board takes into accounts many factor including general understanding of marketing, finance and other discipline relevant to the success of a large publicity - traded company in today?s business environment; understanding of Microsoft?s business on a technical level.

4) Board Composition: Mix of management and independent directors. The board believes that, except during periods of temporary vacancies, a majority of its directors must be independents.

5) Term Limits: Director who have served on the board for an extended period of time are able to provide valuable insight into the operation and future of the company based on their experience with an understanding of the company?s history, policies and objectives.

6) Retirement Policy: The board believes that 75 is an appropriate retirement age for outside directors.

7) Directors with significant job changes: The board believes that any director who retires from his or her present employment, or who materially changes his or her position, should tender resignation to the board.

8) Selection of CEO and Chairman: The board selects the company?s CEO and Chairman in the

manner that it determines to be in the best interests of the company?s shareholders.

Board meetings: involvement of Senior Management

9) Board meeting-agenda: The Chairman of the board and CEO, taking into account suggestions from other members of the board, will set the agenda for each board meeting, and will distribute the agenda in advance to each director.

10) Advance distribution of material: All information relevant to board?s understanding of matters to be discussed at an upcoming board meeting should be distributed in writing or electronically to all members in advance.

11) Access to employees: The board should have access to company employees in order to ensure that directors can ask all questions and glean all information necessary to fulfill their duties.

12) Executive session of independent directors: The independent directors of the company will meet regularly o executive session, i.e., with no management directors or management present, at least three times each fiscal year.

Performance Evaluation: Succession Planning

13) Annual CEO Evaluation: The chair of the governance and nominating committee leads the

independent directors in conducting a review at least annually of the performance of the CEO and communicates the result of the review to the CEO.

14) Succession Planning: As part of the annual officer evaluation process, the compensation committee works with the CEO to plan for CEO succession, as well as to develop plan for interim succession for the CEO in the event of an unexpected occurrences.

15) Board self-evaluation: The governance and nominating committee is responsible for conducting an annual evaluation of the performance of the full board and reports its conclusion to the board.

Compensation

16) Board compensation review: Company management should report to the board on an annual basis as to how the company?s director compensation practices compare with those of other large public corporations.

17) Directors' stock ownership: The board believes that, in order to align the interests of directors and shareholders, directors should have a significant financial stake in the company.

Committees

18) Number and types of committees: The board has 5 committees- an Audit committee, a

compensation committee, governance and nominating committee, a finance committee, and an antitrust compliance committee. The board may add new committees or remove existing committees as it deems advisable in the fulfillment of its primary responsibilities.

a. Audit committee

b. Compensation committee

c. Governance and Nominating committee

d. Finance committee

19) Composition of committee: Committee chairperson. The audit, compensation, governance and nominating and antitrust compliance committees consist solely of independent directors.

20) Committee Meetings and Agenda: The chairperson of each committee is responsible for

developing, together with relevant company managers, the committee's general agenda and

objectives and for setting the specific agenda for committee meeting.

Miscellaneous

21) Review of governance guidelines: The practices memorialized in these guidelines have developed

over a period of years. The board expects to review these guidelines at least every two years as

appropriate.

Questions:

There are four committees that include:

a. Audit committee

b. Compensation committee

c. Governance and Nominating committee

d. Finance committee

2. Discuss the Performance evaluation planning in brief.

The Performance evaluation planning involves a review of the performance of the CEO in a year by the nominating committee and an individual chairing the governance. The weak and strong areas are looked at and a number of proposals come up with that the CEO will look at in order to improve their performance.