MicroStrategy Inc. has produced such solid profits and strong stock performance recently that it was almost possible to believe the company had put its past behind it and matured into what it was always meant to be -- a nice second-tier software maker.


Then MicroStrategy did one of those things that leave Washington investors scratching their heads:

According to a filing last week with the Securities and Exchange Commission, the company gave founder, chairman and chief executive Michael J. Saylor a $25,000 raise to $400,000 a year and then wrote Saylor a check for $800,000 as a midyear bonus.

Since when is success determined by the halftime score?

It's not uncommon for salespeople to be compensated based on their performance over periods of less than a year, but only a handful of companies report awarding midyear bonuses to top executives, according to Factiva, the online data service of Dow Jones & Co.

"Bonuses based on less than a full year's performance are an utter joke," said Graef S. Crystal, an executive compensation guru. "They allow an executive to cash in on the good parts of the year, but he is never forced to take a negative bonus for the bad parts of the year."

MicroStrategy officials declined to comment on the record, except to point out that the bonus was granted by the company's compensation committee, composed entirely of outside directors.

Saylor's surprise bonus is the latest evidence that while MicroStrategy has put its conspicuous problems behind it, it will never be a plain-vanilla investment. And Saylor, who in his younger days was given to grand pronouncements that his company's software would be "ubiquitous" and create an information revolution, will never be just another CEO.

Washington's hottest high-tech company before the tech bubble burst, MicroStrategy's stock was decimated on March 20, 2000, when the company restated financial results. The company was later cited by the Securities and Exchange Commission for accounting irregularities. Saylor and two other executives settled the case by paying $350,000 each in penalties, neither confirming nor denying wrongdoing. The trio paid $10 million to settle civil lawsuits over the accounting issue.

The company survived both the tech stock collapse and the SEC investigation by lowering its profile and concentrating on its business of selling data-mining software that makes it possible to find crucial needles in haystacks of information.

The company is regarded as a leader in its market niche but still is controversial enough that analysts who recommend the stock salt their reports with caveats.

Though rating the shares "buy," JMP Securities of San Francisco said this month that MicroStrategy "should only be considered by investors with a high tolerance for risk."

Investment firm Jefferies & Co. was more blunt: "Common shareholders bear the risk that the company CEO may make decisions that are not in their best interest."

That report came out Aug. 10 -- before the chief executive collected his halftime reward.

Saylor isn't the only top executive at MicroStrategy who's been doing well of late.

The company's No. 2, Vice Chairman and Chief Operating Officer Sanju K. Bansal, sold a big part of his stake in the company earlier this month, collecting $4.75 million by selling 76,556 shares. The company's stock closed Friday at $75.42.

Diversifying his personal investments, Bansal has reduced his holdings of MicroStrategy shares by about 40 percent in the past 18 months. He holds 390,000 shares worth about $29 million.

This is a good time to sell. The stock is trading at a four-year high. It's up 25 percent this year and 126 percent from a year ago.

There are two key factors in the stock performance.

First, MicroStrategy is having a very good year. First-half revenue grew 27 percent, to $125.4 million from $99 million in the same period a year earlier. Profit for the six months grew 50 percent, to $32.6 million from $21.8 million, and earnings per share jumped to $1.99 from $1.27.

The big improvement in earnings per share partly reflects the second factor lifting the stock -- an aggressive stock buyback program.

The company bought back 2.5 million shares of its stock in the first half of the year and announced plans July 28 to buy as much as $300 million more.

Buybacks -- even the announcement of planned buybacks -- generally lift stock prices, and that's generally good for stockholders.

MicroStrategy's strategy has been particular beneficial for its two top executives.

The boost in the share price meant that Bansal got top dollar for the shares he sold. By standing ready to buy shares, the company also prevented Bansal's selling from depressing the price, which sometimes happens when insiders sell.

And taking shares out of the hands of public investors boosts the stake of Saylor, who is far and away the biggest shareholder.

Saylor dominates MicroStrategy because he holds about 2.8 million shares of the company's Class B shares, each of which has 10 votes in corporate elections. The public owns only Class A shares, which have just a single vote.

Analysts at Legg Mason calculated that Saylor's voting power increased from about 61.2 percent in May to 64.5 percent as of Aug. 1 as the result of the buybacks.

Both Legg Mason and JMP Securities say Saylor may be doing more than tightening his grip. They speculate that he may be trying to get rid of all the other shareholders and take the company private.

Another reason to wonder whether MicroStrategy may intend to go private was the decision last month to terminate the employee stock purchase plan, which allows MicroStrategy workers to buy stock via payroll deductions.

Stock that's sold to employees adds to the "float" of shares available for public trading, of course, because when employees decide to sell, their stock is sold in the open market rather than back to the company.

If going private is a possibility, it's counterproductive to put more shares into the hand of the public. But there is a serious downside to the strategy -- employee stock purchases and employee stock options are important incentives for high-tech companies, and that tool won't exist if MicroStrategy goes private.

MicroStrategy does not comment on such speculation as a matter of company policy and recently has been criticized by analysts for curtailing its contacts with investors.

The company a few months ago stopped providing sales and earnings projections. When the second quarter ended in July, the company said it would no longer host a quarterly conference call in which analysts could ask questions about financial reports and operations.

Those steps have alienated analysts, who say the secrecy makes the stock a more volatile and risky investments.

MicroStrategy supporters shrug off the criticism, pointing out that many well-known companies don't provide projections or hold conference calls -- including, they note, The Washington Post Co.

MicroStrategy awarded Michael J. Saylor an unusual bonus.