Microsoft will let shareholders nominate board members

Bylaw change means anyone with a 3 percent stake in the company can push their own leadership candidates

A building on Microsoft's Redmond, Washington campus

A building on Microsoft's Redmond, Washington campus

Microsoft added a provision to its bylaws Friday that allowed shareholders with a significant stake in the company to directly nominate up to two candidates to its board of directors.

With the change, Microsoft will allow consortiums of up to 20 shareholders, who have owned a combined 3 percent stake in Microsoft for the past three years, to put forward nominations for up to 2 candidates or 20 percent of the board, whichever is larger. Functionally, that means a very small number of people and institutional investors have the power to nominate board members through the process.

Microsoft's bylaw change doesn't seem to have been the result of any significant behind-the-scenes intrigue. Several large companies have adopted "proxy access" proposals that allow this sort of direct nomination from shareholders over the past few years including Verizon, Western Union and Bank of America. Microsoft's terms are also largely in line with other proposals adopted by those corporations.

The change comes after investor Myra Young submitted a shareholder proposal last year that would have allowed groups of shareholders to nominate candidates for 4 of the board's 10 seats. At the time, the company opposed it and said it was "fundamentally flawed and not in the best interest of shareholders," and the proposal was voted down.

Even with the new proxy access provisions in place, it's unlikely that Microsoft will see major shake-ups in its board. Because the rules restrict nomination to coalitions of 20 investors, only those entities that already have a large stake in Microsoft will be able to use the system to make waves. Candidates submitted for voting will still need to win election by a majority of shareholders.

In addition, candidates nominated through this process who withdraw from consideration, become ineligible for election or don't receive more than 25 percent of votes in favor of their candidacy will be prevented from running again for two years. That means activist investors who want to take advantage of the system will need to get support from major shareholders in order to continue pushing director candidates.

The change comes as Microsoft faces ongoing pressure from Wall Street. In 2013, the company agreed to name ValueAct Capital President Mason Morfit to its board as part of an agreement to avoid a proxy fight with the activist investment firm. Microsoft also likely hasn't heard the last of Myra Young. Her husband James McRitchie, who has co-submitted a number of other shareholder proposals with her, said in an email that the two of them plan to file additional proxy access-related proposals to expand the power given to Microsoft shareholders.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Microsoftbusiness issuesSEC Filings

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Blair Hanley Frank

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?