Posted by John Seethoff
Vice President and Deputy General Counsel

In today’s economic climate, strong corporate governance policies and practices are more important than ever.  Sound corporate governance can help restore public trust and solidify the foundation on which a broad recovery can be built.

Last month, Ray Gilmartin, chair of the governance and nominating committee of the Microsoft Board of Directors, sent a letter to our largest shareholders to describe our principal corporate governance practices.  A desire to be transparent about our policies was the main driver behind Ray’s letter. 

But communication isn’t a one-way street.  Our shareholders can always provide their thoughts to the board about corporate governance at Microsoft, and we welcome such input.  We recently received a “Say-on-Pay” shareholder proposal from the United Brotherhood of Carpenters Pension Fund for inclusion in our annual proxy statement.  It’s a creative variation on the concept of asking that a board adopt a process to allow shareholders to vote on a company’s executive compensation practices.  Just Wednesday, Intel implemented a Say-on-Pay policy at their annual meeting.

 

We’ve been studying the evolution of Say-on-Pay over the last year.  Variations of the concept are currently circulating via proposed legislation, shareholder proposals and management initiatives.  Our board is currently evaluating what approach to Say-on-Pay might best serve the interests of the company and our shareholders.  We look forward to continuing this important dialogue.

As a rule, the Microsoft Board of Directors is committed to adopting new policies and practices that support long-term shareholder value, build our brand and encourage innovation and appropriate risk-taking. 

This week, for instance, our compensation committee acted to enhance our executive compensation recovery policy.  Such policies (sometimes referred to as “clawbacks”) are designed to recover executive compensation that, with hindsight and up-to-date information, is determined to have been unearned.  Our revised policy covers restated non-financial measures and will apply regardless of whether any improper conduct contributed to the restatement.

We invite our shareholders to communicate with us on these and any other corporate governance issues, either by commenting on this blog or by e-mailing  us at askboard@microsoft.com.