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Microsoft Corporation


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Company Profile

Microsoft Corporation (NASDAQ: MSFT) is anAmerican multinational corporation headquartered inRedmond, Washington, United States that develops,manufactures, licenses, and supports a wide range of

products and services predominantly related tocomputing through its various product divisions.Established on April 4, 1975 to develop and sellBASIC interpreters for the Altair 8800, Microsoft rose

to dominate the home computer operating systemmarket with MS-DOS in the mid-1980s, followed bythe Microsoft Windows line of operating systems.


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Company Profile

Microsoft would also come to dominate theoffice suite market with Microsoft Office. Thecompany has diversified in recent years into thevideo game industry with the Xbox and its successor,

the Xbox 360 as well as into the consumerelectronics and digital services market with Zune,MSN and the Windows Phone OS. The ensuing rise ofstock in the company's 1986 initial public offering

(IPO) made an estimated three billionaires and12,000 millionaires from Microsoft employees (Forbes400 list revealed that in March 2011 both Jon Shipleyand Nathan Myhrvold lost their billionaire status). InMay 2011, Microsoft Corporation acquired Skype

Communications for $8.5 billion.


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Corporate SocialResponsibility

ServingCommunities

Education

Jobs & Growth

Nonprofits Humanitarian

Response

WorkingResponsibly

Our People[Employees]

EnvironmentalSustainability

ResponsibleSourcing

Privacy & Safety

Integrity &

Governance


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Serving Communities

Education| Jobs & Growth|Nonprofits| Humanitarian Response


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Education

Microsoft programs have a focuson helping youth and young adultsaround the world obtain the skills that

they need, connect them toopportunities, and support them inpursuing their dreams. They have the

unique ability through technology andpartnerships to make education andlearning more accessible and moreengaging for them.


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What Microsoft is Doing

Helping schools train students and teachers:InFY2011 they partnered to help thousands of schoolsprovide information and communications technologytraining and technology resources for students andteachers.

Using gaming as a teaching tool:Teachers around theglobe are beginning to use Kinect to help stimulatestudents language literacy, numeracy development, andeven physical fitness. One school principal in South Africa

observed that students focus so intensely on the gamesthat they overcome their inhibitions and learn more easily.

Providing problem-solving software:They made iteasier for schools to adopt Microsoft Mathematics 4.0, aprogram that helps students tackle math and science

challenges, by providing it at no charge.


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Jobs & Growth

Technology is a driver of economicgrowth. For example, small andmedium-sized businesses that heavily

use the cloud grow and export twice asmuch as those that dont. Microsoftand their partners have the

responsibility and opportunity to helpmaximize the economic growth thattechnology can generate. Its good fortheir business and good for theircommunities to support small


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Propelling innovation: One key to creating economic growththrough technology is innovation. That is why Microsoft is one of theindustrys leading investors in research and development.

EQUIPPING WORKERS WITH TECHNOLOGY SKILLS

Microsoft continued to heavily focus on providing people with thetechnology training that they need to get and keep good jobs.

Through they programs and partnerships, in FY2011 Microsoftprovided technology skills training to approximately 23 millionpeople around the world, reaching more than 190 million since2003.

Microsoft Elevate America program provides technology skillstraining and resources to help people in the United States findemployment.

In FY2011, they also announced the Microsoft Elevate AmericaVeterans Initiative. This is their commitment to contribute $2 million

in cash and up to $6 million in software over the next two years tosu ort ro rams for members of the U.S. armed services and their


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Nonprofits

Technology helps nonprofits reduce costs,boost productivity, raise funds, and deliver newand improved services to their localcommunities. Microsoft has a longstandingcommitment to ensuring that technology isaccessible to nonprofits around the world,bringing the benefits of technology to localcommunities.

They are proud to work with thousands ofnonprofits around the world to get them accessto the technology that they need and trainthem how to use it.


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Giving nonprofits access totechnology

Donating software: In FY2011 theydonated more than $844 million insoftware to 46,886 nonprofits in 113countries/regions. The value of

software that they have donatedglobally since 1998 is more than $3.9billion.

Equipping refurbished


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Offering technology webinars:Theyhosted webinars twice a month, at nocharge, to help more than 750

nonprofit professionals around theworld learn about a variety oftechnology topics, including cloud

computing, collaboration throughMicrosoft SharePoint, andmanaging donors and volunteerswith CRM.


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Humanitarian Response

People and businesses who have suffereda disaster need help as quickly as possible.Microsoft works with partners to use technologyto accelerate communication between responseorganizations, enable accurate communicationwith the public, and speed the return tonormalcy. They provide customers with thesupport and services that they need to get their

businesses back up and running as quickly aspossible. A fast recovery not only benefitscommunities, but also decreases the economicimpact on the economy.


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Microsoft activated company-wideresponses to two major humanitarianemergencies in FY2011: the

earthquake and tsunami in Japan andthe flooding in Pakistan. Thecompany also supported relief efforts

for more than 40 other disastersaround the world.

Microsoft and its employees also

contributed approximately $3.4


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Japan Earthquake and TsunamiResponse

Organizations

As a part of a cross-industry effort, provided more than 1,200

laptop computers and software to aid workers. They also

worked with Dell and HP to provide 250 computers for NetHope,

they partner that provides humanitarian response organizations

with technology support. Worked with a partner to develop an

online tool to manage evacuation center capacity and resources

Deployed a pilot cloud-based portal to help a local food bank

keep the public up to date on where they could get food

Government and

Infrastructure

Providers

Developed a website and mapping tool in partnership with the

Ministry of Education, Culture, Sports, Science, and Technology

to share information about radiation levels with the public

Provided Microsoft Business Productivity Online Standard

Suite/Office 365 to organizations whose communications

infrastructure was damagedLocal and

InternationalPublic

Worked with partners to develop and deploy the cloud-based

application J!ResQ to help displaced persons find their familyand friends. Microsoft online properties in Japan featured public

information, such as a rolling blackout calendar and Bing map

tools showing the government radiation reports and the status

of roads. Raised global awareness and funds through Microsoft

online properties such as MSN, Bing, and Xbox LIVE

Customers and Provided free customer service and su ort, Windows Azure,


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ur eop e: ompensa onand Professional

Development No matter where we go in the world,

we have to attract great talent. Thepassion and talent of our people iswhat drives the success of Microsoft.

Lisa Brummel, Chief People Officer


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PROVIDING INDUSTRY-LEADINGCOMPENSATION AND BENEFITS

Updated the way they pay theirpeople:They announced thebiggest-ever changes to their paystructure. They are raising

employees base salaries, providingmore cash up front by reducingperformance-based stock award

targets for most employees.


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Our People: Diversity andInclusion

Our emphasis on diversity andinclusion enables us to build aworkforce and create a work

environment that fosters talent andcreativity and welcomes differentexperiences, perspectives, and

capabilities. We believe this is the keyto understanding their customerschanging needs so they can continueto deliver products and services thatprovide them with real value.


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BUILDING A MORE DIVERSEMICROSOFT WORKFORCE

Increasing executive leadershipand accountability for diversityand inclusion:This higher level ofengagement will allow them to drive

greater alignment around globaldiversity and inclusion priorities andimpact across Microsoft and to hold

their leaders accountable for results.


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Employee CommunityInvolvement

Microsoft employees make them astrong and successful company. Theyhave a responsibility to support themas they unleash their passions and usetheir talents to help the people and

causes that they care about.


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SUPPORTING EMPLOYEE GIVING AND VOLUNTEERISM

Encouraging volunteerism:They organize employee volunteeractivities and support employees personal volunteering by offeringpaid time off for volunteering outside the United States and makingcontributions to nonprofits where their employees volunteer in theUnited States.

Matching charitable giving: In the United States, they matchemployee donations to nonprofits up to $12,000. They also run anannual employee giving campaign in support of U.S.-based nonprofits.

They contributed a record-breaking $93.5 million.

CONNECTING SKILLED EMPLOYEES WITH NONPROFITS IN NEED

To help connect skilled volunteers with the community, they createdVolunteer Manager, an online tool that matches Microsoft employeesand Microsoft alumni with volunteer opportunities based on theirskills, areas of interest, location, and other factors.

EMPOWERING EMPLOYEES TO PERSONALIZE AND INSPIREMICROSOFTS CITIZENSHIP


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Environmental Sustainability

IT accounts for about 2 percent ofthe worlds energy use, but thatpercentage is growing as demand for

IT services increases. The cloud willallow us to rethink the role of IT andenergy, so that theyre not just

thinking about how to reduce theimpact of IT, but also about how IT canreduce the impact of the other 98percent of the energy consumed.


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On Operations

Environmental sustainability startswith how they run their own business.Microsoft is always finding ways fortheir business to operate moreefficiently and sustainably.


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REDUCING CARBON EMISSIONS

To achieve their goal to reduce carbon emissions per unit of revenue by 30percent by 2012 (calendar year) compared with 2007, they are focusing onthe three key areas of their business operations that have the greatestpotential for emissions reductions: data centers, travel, and facilities.

REDUCING CORPORATE TRAVEL

They adopted a new company car policy that requires CO2 emissions for allnew Microsoft company cars to average 130 grams per kilometer,representing a significant reduction from previous averages.

They added 12 electric vehicle charging stations to the Puget Sound campus

to support employee-owned electric vehicles, as well as other companyservice vehicles.

IMPROVING THE EFFICIENCY OF THEIR BUILDINGS

They reduced computer energy use by 27 percent.

They launched the Sustainability Champions program.

DECREASING WASTE


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Microsoft Technology for TheEnvironment

Governments, businesses, andhouseholds are looking for ways toreduce energy and resource use. Newtechnologies will be an important partof the solution.


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CREATING ENERGY SAVINGSTHROUGH TECHNOLOGY

Developing cloud products:Microsoft continues to develop cloudsolutions, such as Microsoft Office365, which help customers use less

energy. Reducing the energy use of

computers:They released Microsoft

System Center Configuration


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Responsible Sourcing

Microsoft has tens of thousands ofsuppliers around the world. They arecritical to their business success, andthey expect them to uphold the highstandards of Citizenship to which they

hold themselves.


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HOLDING THEIR SUPPLIERS ACCOUNTABLE

Strengthened their Vendor Code of Conduct:Theyrequire all of their suppliers to follow their Vendor Code ofConduct.

Monitoring priority suppliers based on risk andcompliance records:They found six non-conformances totheir non-discrimination policies. Of these, three wereescalated to senior management and were placed onrestricted status (meaning that they could not be awarded

any new Microsoft business). Initiated a new grievance process:They collaborated

with the Fair Labor Association and Clear Voice Hotline togive workers in their supply chain access 24 hours a day, 7days a week, to a hotline that allows anonymous reporting

of grievances and issues of concern.


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KEEPING CONFLICT MINERALS OUT OF THEIR SUPPLY CHAIN

Adhering to new regulations:In FY2011 the United States passed theDodd-Frank Wall Street Reform and Consumer Protection Act, whichrequires companies to disclose whether their products use mineralsfrom conflict zones, such as the Democratic Republic of the Congo.

They are working with their suppliers to trace the source of allminerals used in their products that could potentially come fromconflict zones.

REDUCING THE ENVIRONMENTAL IMPACT OF THEIR SUPPLYCHAIN

Setting environmental standards:They address environmentalissues with their suppliers in many ways, from measuring thegreenhouse gas emissions of their Tier 1 contract hardwaremanufacturers and requiring that the computers they buy meet theGold level requirements of the Electronic Product EnvironmentalAssessment Tool (EPEAT) to seeking more locally sourced and

organic food for their cafeterias.


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Privacy & Safety

Internet privacy, safety, andsecurity are at the heart of their valuesas a company. We are committed to

promoting strong methods ofauthentication on the Internet that canlead to greater accountability in a host

of online scenarios, while alsorespecting personal privacy.

Scott Charney, Corporate Vice

President, Trustworthy Computing


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Privacy & Security

Innovations such as cloudcomputing have countless benefits forsociety, but can also have some

challenges. As more people andbusinesses entrust the cloud with theirinformation, they are working hard to

uphold that trust.


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What Mricrosoft is Doing

DEVELOPING SAFER PRODUCTS

Examples of new Microsoft productsdesigned for privacy and safetyinclude:

Windows Internet Explorer 9:The latest version of their web

browser incorporates new features tohelp users limit the information thatwebsites can collect about them and

to help protect users from


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TEACHING PEOPLE HOW TO STAY SAFER ONLINE

Safer Internet Day: More than 1,000 Microsoft volunteers visitedschools around the world and, together with local partners, helpedteach more than 100,000 parents, teachers, and students aboutonline safetyup from 50,000 reached on Safer Internet Day 2010.

Data Privacy Day:They celebrated global Data Privacy Day byproviding consumers with guidance on how to more safely use mobilephones and other devices.

HELPING PROTECT PEOPLE AND BUSINESSES ONLINE

Fighting online crime:In FY2011, the Microsoft Digital Crimes Unitcoordinated a legal and technical action that took down the

Win32/Rustock botnet.

Working with law enforcement and government:They workedwith the European Commission to create 2CENTRE. They alsolaunched the Digital Crimes Community Portal, an online portal where

Microsoft and members of the law enforcement and securitycommunities can share intelligence on digital crime.


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Freedom of Expression

Freedom of expression is a basichuman right. The Internet is a powerfultool for free expression, and theysupport it as a vehicle for theexchange of information and ideas.


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WORKING WITH THEIR PEERS TO ADVANCE FREEDOM OF EXPRESSION

In 2008, they worked with industry peers, civil society groups, academics,and investors to found the Global Network Initiative (GNI), an organizationdedicated to advancing Internet freedom. The GNI principles and guidelinesinform how they engage in markets throughout the world.

SUPPORTING FREEDOM OF POLITICAL EXPRESSION

Anti-piracy enforcement and nonprofits:Early in FY2011 there wereallegations that authorities in Russia had used software piracy charges toconfiscate computers and challenge nonprofits that had voiced opposition tothe government. They created a new unilateral software license to allownonprofits in certain countries/regions to use Microsoft software freely and

legally.

Political change in the Middle East:

They have supplied e-case and data management software to three Tunisiangovernment commissions that are managing reform efforts: Human RightsAbuse Commission, Political Reform Commission, and Stolen Assets

Commission.


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Integrity & Governance

We were an early adopter ofmajority voting, the first company toadopt say on pay, and one of the very

earliest adopters of a no-faultclawback. We continue to evaluatetheir corporate governance framework,

and talk with their Board about what isright for us and their shareholders.

- John Seethoff, Vice President and

Deputy General Counsel


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Corporate Governance

Trust in U.S. based corporations isnear an all-time low. Good corporategovernance practices build trust,create internal checks and balances,and strengthen management

accountability.


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ENGAGING PROACTIVELY WITHSTAKEHOLDERS

Microsoft sent its annual letter totheir 50 largest investors frommembers of the Governance andNominating Committee of the Board.

At least twice annually, members ofmanagement engage with a broadspectrum of their investors, including

public pension funds and those


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Public Policy

Political advocacy lets us promotetheir interests while sharing expertiseand contributing to policies.

Ultimately, they want what is good forboth their business and society.


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ENGAGING TRANSPARENTLY WITHPOLICYMAKERS

Public policy engagement: Theyupdate their public policy agendaannually to reflect changes in thepolicy environment and in their

business. Advocacy:In compliance with

regulations and their commitment to

transparency, Microsoft regularly files


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Microsoft does not make corporatecontributions to any non-candidate ornonparty political committee

organized under section 527 of theInternal Revenue Code.

No campaign contributions are given

in anticipation of, in recognition of, orin return for an official act.

Microsoft amended these principles

in June 2010 to clarify that Microsoft


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Compliance

Compliance with laws andregulations is fundamental to workingresponsibly. Microsofts goal is to meet

or exceed legal requirements byconducting their business ethically,responsibly, and with integrity. This is

about doing the right thing andcreating trust and not just aboutmaintaining their license to operate.


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COMPETING RESPONSIBLY WITHIN THEIR INDUSTRY

Responding to the i4i ruling:In June 2011 the U.S. Supreme Courtruled in favor of the Canadian company i4i, which claimed thatMicrosoft violated certain patent rights related to an XML techniquethat was implemented in Microsoft Word. Although Microsofts

arguments were supported by Apple, Facebook, Cisco, and manyother leading companies, the U.S. Supreme Court ruled that the i4iinnovation was patentable, enforcing a $290 million award againstMicrosoft.

RESPECTING ANTITRUST LAWS AND PRINCIPLES

They have continued to comply with antitrust rulings and appliedprinciples that support innovation, choice, and opportunities fordevelopers in the development of new products and services. On May12, 2011, the U.S. Consent Decree that ended the competition lawsuitagainst Microsoft in the late 1990s reached its termination date. TheU.S. Department of Justice, various state attorneys general, and thecourt overseeing compliance concluded that no further extensionswere warranted and that Microsoft had met its obligations under the


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PROMOTING GLOBAL COMPLIANCE AND GOVERNANCEEFFORTS

They work with industry peers and global organizations to promotegood governance and compliance practices. Their achievementshave included:

Promoting anticorruption initiatives among intergovernmentalorganizations and other multinational companies through theirmembership in the World Economic Forum Partnership AgainstCorruption Initiative. This engagement also shows their supportfor the United Nations Global Compact principles on

anticorruption.

Partnering with the United Nations Office on Drugs and Crime todevelop a technology tool to help in the fight against corruptionand organized crime.

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