8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 30, 2013

MICROSTRATEGY INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware	0-24435	51-0323571
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1850 Towers Crescent Plaza Tysons Corner, Virginia	22182
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (703) 848-8600

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Salary Determinations

On April 3, 2013, the Chief Executive Officer (the “CEO”) of MicroStrategy Incorporated (the “Company”) approved increases to the annual salaries of certain executive officers of the Company effective April 1, 2013, resulting in annual salaries as follows:

Name	Title	Annual  Salary effective April 1, 2013
Jonathan F. Klein	President & Chief Legal Officer	$	800,000
Douglas K. Thede	Senior Executive Vice President & Chief Financial Officer	$	575,000
Peng Xiao	Senior Executive Vice President & Chief Technology Officer	$	575,000
Bob Watts	Senior Executive Vice President & Chief Operating Officer	$	500,000

The CEO previously established an annual salary of $800,000 for Paul N. Zolfaghari, the Company’s President, at the time that Mr. Zolfaghari joined the Company in November 2012. Mr. Zolfaghari’s annual salary remains unchanged at this time.

2013 CEO Bonus Formula

On March 30, 2013, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of the Company established a formula (the “2013 CEO Bonus Formula”) for determining the eligible bonus amount with respect to the performance of Michael J. Saylor, the Company’s CEO, during the fiscal year ending December 31, 2013. The 2013 CEO Bonus Formula provides for an eligible bonus amount calculated using graduated rates based on the Company’s diluted earnings per share (“DEPS”) for the fiscal year ending December 31, 2013, as follows:

• $400,000 per dollar of DEPS for the first dollar of DEPS, plus

• $500,000 per dollar of DEPS for the second dollar of DEPS, plus

• $600,000 per dollar of DEPS for each dollar of DEPS over $2.

Mr. Saylor’s maximum cash bonus amount pursuant to the 2013 CEO Bonus Formula is $8,000,000. The Compensation Committee has the discretion to award a cash bonus amount lower than the eligible bonus amount calculated using the 2013 CEO Bonus Formula.

2013 President Bonus Formulas

On March 30, 2013, the Compensation Committee established formulas (each, a “2013 President Bonus Formula”) for determining the eligible bonus amounts with respect to the performance of each of Messrs. Klein and Zolfaghari during the fiscal year ending December 31, 2013. Each of the 2013 President Bonus Formulas provides for an eligible bonus amount calculated by multiplying $160,000 by the Company’s DEPS for the fiscal year ending December 31, 2013.

The maximum cash bonus amount for each of Messrs. Klein and Zolfaghari pursuant to their respective 2013 President Bonus Formulas is $6,500,000. The Compensation Committee has the discretion to award a cash bonus amount lower than the eligible bonus amount calculated using each 2013 President Bonus Formula.

2013 Senior Executive Vice President & Chief Operating Officer Bonus Plan

On March 30, 2013, the Compensation Committee adopted a cash bonus plan for Mr. Watts relating to his performance during the fiscal year ending December 31, 2013. A copy of this plan is attached as Exhibit 99.1 to this Current Report on Form 8-K. Under this plan, Mr. Watts is eligible to receive:

• a cash bonus amount calculated by multiplying 0.50% by the following dollar amount: (1) the Company’s gross profit for 2013 minus (2) sales and marketing expenses for the Company’s core business intelligence business minus (3) a fixed budget amount; and

• a cash bonus amount calculated by multiplying 0.75% by the increase in the annualized value of the Company’s maintenance contracts worldwide between the end of 2012 and the end of 2013.

Mr. Watts’s maximum cash bonus amount pursuant to this plan is $6,500,000. The Compensation Committee has the discretion to award cash bonus amounts lower than the eligible bonus amounts calculated pursuant to the plan.

2013 Cash Bonus Targets for Chief Financial Officer and Chief Technology Officer

On April 3, 2013, the CEO established cash bonus targets for 2013 for Messrs. Thede and Xiao, each in the amount of $575,000. Awards pursuant to the foregoing cash bonus targets will be determined by the CEO based on the CEO’s subjective evaluation of the individual’s performance in the context of general economic and industry conditions and Company performance during 2013.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1*	Senior Executive Vice President & Chief Operating Officer 2013 Bonus Plan.

* Certain portions of this Exhibit were omitted by means of redacting a portion of the text. The Exhibit has been filed separately with the Secretary of the Commission with such text pursuant to an Application for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 4, 2013	MicroStrategy Incorporated
	(Registrant)
	By:	/s/ Douglas K. Thede
	Name:	Douglas K. Thede
	Title:	Senior Executive Vice President & Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1*	Senior Executive Vice President & Chief Operating Officer 2013 Bonus Plan.

* Certain portions of this Exhibit were omitted by means of redacting a portion of the text. The Exhibit has been filed separately with the Secretary of the Commission with such text pursuant to an Application for Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

EX-99.1

Exhibit 99.1

Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Double asterisks denote omissions.

Senior Executive Vice President & Chief Operating Officer

2013 Bonus Plan

Name: Bob Watts (“Plan Participant”)

Effective Date: 1 January 2013

This document (the “Plan”) constitutes the full terms and conditions of your annual bonus plan for 2013 and supersedes all oral communications and prior writings with respect thereto. As Senior Executive Vice President & Chief Operating Officer of MicroStrategy Incorporated (the “Company”), you are eligible to earn for 2013: (i) an annual bonus described in Section I below (the “Field Margin Bonus”) and (ii) an annual bonus described in Section II below (the “Maintenance Bonus”).

I. Field Margin Bonus

a. Any Field Margin Bonus for 2013 shall be determined by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) by multiplying (i) the Field Margin Bonus Rate (as defined below) by (ii) the amount by which the Field Margin (as defined below) exceeds USD [**] ($[**]).

b. “Field Margin Bonus Rate” is defined as 0.50% (one-half of one percent).

c. “Field Margin” is defined as the Company’s consolidated gross profit, less sales and marketing expense for the core business intelligence business (i.e., the Company’s business intelligence software and services business unit, which excludes sales and marketing expense attributable to the Company’s Angel.com business), as calculated in accordance with GAAP and shown in the Company’s Consolidated Statements of Operations by business unit for 2013.

II. Maintenance Bonus

a. Any Maintenance Bonus for 2013 shall be determined by the Compensation Committee by multiplying (i) the Maintenance Bonus Rate (as defined below) by (ii) the increase, if any, in the annualized value of maintenance contracts between the end of 2012 and the end of 2013 in your territory.

b. “Maintenance Bonus Rate” is defined as 0.75% (three-quarters of one percent).

c. The annualized value of maintenance contracts at the end of each applicable fiscal year shall be calculated by MicroStrategy’s Finance department in its sole discretion by annualizing the total amounts owed under the applicable maintenance contracts using a constant foreign exchange rate.

III. General Terms

a. MicroStrategy reserves the right to modify, suspend or terminate this Plan or any bonus payment in whole or in part, at any time, with or without prior notice or reason. For example, a bonus may be modified due to a financial accrual adjustment from a prior period.

b. No Field Margin Bonus or Maintenance Bonus shall be earned by or paid to Plan Participant under this Plan unless and until the Compensation Committee certifies in writing the applicable bonus amount, if any.

c. If Plan Participant’s employment with MicroStrategy terminates (regardless of the reason or cause of the employment termination) prior to payment of a bonus under this Plan, no such bonus shall be earned by or paid to Plan Participant under this Plan unless determined otherwise by MicroStrategy in its sole discretion.

d. Plan Participant is not eligible for the payment of any bonus for any transaction unless: (a) a formal quote was submitted using the MicroStrategy Quote System that clearly describes each term and condition of the proposed transaction and is in full compliance with the MicroStrategy Quote System Policy; (b) the submitted quote was approved in advance of any discussion with the customer about the

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terms and conditions of that transaction; (c) all pricing communications with the customer include the official quote approved in the quote system; and (d) the final transaction is identical in all respects to the approved quote.

e. Bonus payments are contingent upon:

(i) The Plan Participant’s full compliance with all MicroStrategy policies as required by his Directorate, including but not limited to the MicroStrategy Code of Conduct, MicroStrategy Revenue Recognition Policy, MicroStrategy Quote System Policy, and the Contracts Negotiation and Approval Policy;

(ii) Completion of all activities in the Field Sales Portal; and

(iii) Plan Participant’s accurate and timely completion and submission of all required Representation Letters and Sales Portal Disclosure Questions.

f. MicroStrategy reserves the right to delay, withhold or suspend any bonuses pending MicroStrategy’s determination of whether each of the above requirements (and all other bonus eligibility requirements set forth herein) have been met. MicroStrategy may recover any bonuses paid to Plan Participant if MicroStrategy subsequently determines that Plan Participant did not meet one or more of the eligibility requirements described in this Plan, or otherwise should not have received the bonus payment.

g. MicroStrategy shall have sole responsibility for the administration, interpretation, and implementation of this Plan. Plan Participant must raise with the Executive Vice President, Human Resources any issues he has concerning his bonus statement within 60 days from receipt of the statement. All decisions and determinations by MicroStrategy relating to the Plan and any bonuses shall, however, be final.

h. This Plan is not an employment contract and does not guarantee or create any expectation of employment. Participation in this Plan does not grant Plan Participant the right to continued employment or any right to continuation in Plan Participant’s job assignment.

i. Notwithstanding anything to the contrary set forth herein, in the event that the sum of the amount of the Field Margin Bonus and the Maintenance Bonus calculated hereunder for 2013 (collectively, the “Aggregate Bonus Amount”) would exceed $6,500,000, the Compensation Committee shall reduce one or more such bonuses to the extent necessary such that the Aggregate Bonus Amount is less than or equal to $6,500,000.

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