Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Tel 425 882 8080
Fax 425 936 7329

April 12, 2001

Mr. Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street, NW.
Washington, DC 20549-0609

RE: File Number S7-04-01

Dear Mr. Katz:

Microsoft appreciates the opportunity to comment on the proposed rule, "Disclosure of Equity Compensation Plan Information." We are opposed to the proposed rule and believe it would result in increased administrative burden to companies with little, if any, benefit to investors.

The information that the SEC believes will be provided to investors from the proposed rule is, in essence, already provided in companies' financial statement footnotes as require by Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation. While the proposed rule would require plan by plan detail, in our opinion, it does nothing to further the SEC's objective of providing investors information on the potential dilutive effect of equity compensation plans. In fact, with the resulting clutter of disclosing information on a plan by plan basis, we suspect that investors will end up comprehending less information about the potential dilutive effect of equity compensation plans.

Furthermore, we believe that the proposed rule is in direct opposition to the recently completed FASB report, "GAAP-SEC Disclosure Requirements." The introduction to that report indicates that, "Both generally accepted accounting principles (GAAP) and the Securities and Exchange Commission (SEC) rules contain disclosure requirements. Disclosure requirements that are redundant are unnecessary and create confusion and wasted effort." The first chapter of the report identifies specific redundancies that currently exist and the second chapter discusses a challenge and recommendation to prevent redundancies from occurring in the future. We can not help but think that the SEC has not accepted that challenge with respect to this new rule proposal.

In addition, as support for the proposed rule, the SEC refers to a recent annual study on stock dilution by the Investor Responsibility Research Center, Inc., which found that about 20% of the companies surveyed did not disclose the number of shares available for future awards under their employee stock plans. This is apparently the case despite the fact that paragraph 46 of SFAS 123 requires disclosure of the number of shares authorized for grants of options or other equity instruments. Microsoft is strongly opposed to new disclosure requirements which are justified by the fact that existing disclosure requirements may not be followed by certain registrants.

Finally, another reason given by the SEC as justification for the proposed rule is that many equity compensation plans may not receive security holder approval. However, it is our understanding that both the New York Stock Exchange and Nasdaq are currently studying the issue of security holder approval of equity compensation plans. We believe it would be premature for the SEC to require new disclosure requirements while these self-regulatory organizations are studying this issue.

If you have any questions, please contact me at (425) 703-6094.


Bob Laux
Director, External Reporting