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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

November 14, 2014 at 5:08 PM

Microsoft reiterates opposition to increased shareholder board nominees

Microsoft says a proposal to give shareholders a greater say in candidates for the company’s board of directors could disrupt the company’s operations.

In a filing released just shy of two weeks before the company’s Dec. 3 shareholders meeting, Microsoft provided a slate of data packaged to show the company is under good stewardship and bringing in new blood to the board of directors.

An proposal up for vote at the meeting would give shareholders a greater say in board nominees. Provisions include allowing a single shareholder or a group of shareholders who’ve held a combined 3% of Microsoft stock for 3 years to nominate candidates numbering up to 40% of the board of directors.

On Friday, the company said the proposal “would provide excessive latitude to investors with short-term interests that could seriously disrupt Microsoft.” The company said the 40% figure in particular went farther than proposals made to other corporate giants Disney, Verizon and Walgreen.

“Creating a circumstance in which 40% of the board could be replaced in any single year introduces significant risk and could cause serious disruption to the board’s oversight of management, strategy and risk,” Microsoft said in an earlier filing.

Shareholders, from nuns petitioning for pay reform at Goldman Sachs to hedge funds advocating the breakup of industrial giants, are increasingly throwing their weight around in corporate America.

Opinion on the matter varies wildly. Some say activist shareholders are generally corporate raiders seeking to find ways to send company shares spiking before cashing out. Others see shareholder activism as a useful way to shake up lethargic corporate boards, rekindling spark and innovation and giving greater voice to the company’s ultimate owners. (For more on the debate see the Financial Times here).

Microsoft is coming out of its own clash with activists, averting a proxy battle last year by agreeing to give the president of investment firm ValueAct Capital a seat on Microsoft’s board.

In any case, Microsoft is likely to face fewer grumpy shareholders at the meeting next month. The company’s stock has soared 33% year to date, and on Friday jumped ahead of oil giant Exxon as the No. 2 company by market value.

The cheers in Redmond may be muted, however. Microsoft, at $410 billion, still badly lags bitter rival Apple at $668 billion.

Comments | More in Corporate governance | Topics: board, microsoft, shareholders meeting


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