Microsoft Empowers Shareholders By Changing Board Election Rules

Microsoft Empowers Shareholders By Changing Board Election Rules
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Microsoft shareholders will now have a little more direct impact when they vote on the firm’s board of directors’ elections. The tech firm has formally announced  changes to the rules for internal board elections to conform to current trend, and give more say to individual shareholders.

Microsoft makes board election more transparent

With the changed rules, Microsoft is empowering investors by offering them a little more freedom to choose board nominees. Activist investors have been asking Microsoft and other tech firms for such changes for a long time, and now Microsoft has finally delivered.

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Microsoft announced the changes last week. The main idea behind this change in the annual board elections is to make the elections more transparent than the previously one-sided process. The changed rules allow for at least two of the board nominees to come from the shareholders themselves. Shareholders will have to meet certain criteria to be nominated: The nominees must own at least a 3% stake in Microsoft and must have owned the same percentage for at least three years.

“We believe this proxy access framework strikes the right balance for Microsoft by ensuring the Board nominees are supported by long-term shareholders representing a significant, but attainable, proportion of outstanding shares,” Microsoft’s deputy general counsel, John Seethoff said.

Microsoft headed it off by Policy reformation

New structures for board elections is not new to Microsoft. In December, a similar approach was proposed at a shareholders meeting, but the plan was defeated as it only received 10% of votes in favor. Microsoft itself opposed the proposal, as it was afraid it could result in too many names on the ballot, making the board unstable. Apple witnessed a similar proposal in their annual meeting in March, but the proposal was turned down with 39% of votes in favor.

Though giving individual shareholders more power is a current trend, not that many firms have acted on it so far. But with Microsoft changing its BoD election rules, there is a good chance that other tech firms will also be encouraged to enact similar changes.

In pre-market trading Wednesday, Microsoft shares were down 0.82% at $46.03. Year to date, the stock is down over 1%, while over the last year it’s up over 7%.

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