Microsoft grants shareholders limited 'say on pay'
Filed under: Company News, Microsoft
Buried deep in Microsoft's preliminary proxy statement is a provision that allows shareholders to vote on management compensation every three years.
The problem with the vote is that it does not count. "Although the vote is non-binding, Board and the Compensation Committee will review the voting results," the proxy says.
In a weak economic environment where many executive pay packages are considered extravagant, shareholder activists and some members of Congress want to see the people who own public companies -- the shareholders -- have a direct say in how the management of those companies are paid.
Microsoft's new provision doesn't accomplish that.
The actual provision reads, "The Board of Directors concluded that providing shareholders with an advisory vote on executive compensation every three years will enhance shareholder communication by providing another avenue to obtain information on investor sentiment about our executive compensation philosophy, policies, and procedures. We believe holding an advisory vote every three years (a "triennial" vote) will be the most effective means for conducting and responding to a say-on-pay vote."
At almost every large firm in the US, these pay packages are set by a compensation committee which is usually made up of a very small number of directors.
The Microsoft 'say-on-pay' action may be a good public relations move, but it won't make a difference to shareholders -- or pay practices -- at all.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
9-19-2009 @ 1:00PM
sgentilejr said...
The idea that Microsoft employees working thee will "allow" the SHAREHOLDERS to vote and decide the top level salaries is in itself insulting to all of the shareholders. The SHAREHOLDERS "Own the Freaking Company" and the people working at Microsoft including the Chairman and CEO are mere "employees" of the shareholders, yet somehow those 'mere employees' believe their rights are more important than the "SHAREHOLDERS rights, when it is the shareholders who actually own the company.
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9-19-2009 @ 2:02PM
steve said...
The biggest problem with your argument is that you are not forced to own any company. If you don't like the compensation package of executives you have the right to not invest in that company. Same with work. If you don't like your pay of compensation package then you have the right to go get another job. No one is forcing you to work anywhere. That is a major flaw in liberal thinking. I pose a question to you. If socialism is instituted and the government has all the control. What do you do when the government decides to go against you? You don't have power then because you decided to give it all to the government.
9-19-2009 @ 1:18PM
nic said...
sgentilejr is correct. America is a weird company, where mere managers of huge corporations (owned, quite democratically, by investors as diverse as pension funds, mutual funds, schools, counties, mom and pop, and other companies, like insurance companies, etc--anyone can become a shareholder of any public company) think they are an 'elite' powerful group that can control 'their' company when in fact CEOs are mere employees of the shareholders and they should NOT have power to basically determine their own pay (directors on comp boards are usually other CEOs from other corps) ...seems like quite the cozy little cartel ring.
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9-19-2009 @ 1:49PM
Ken Cook said...
Microsoft has been ignoring it's customers for years, why should the minor stockholders be given any better consideration? But then there's the lie we get from all the big corporations these days. They say: "We have to take care of the stock holders!" but what "they" mean is they have to take care of the MAJOR stock holders. Most of whom sit on the board anyway.
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9-19-2009 @ 3:01PM
clem said...
It would seem to me that the big corporations that lobbied / bought congress to force retirement funds into the market through 401Ks and other mechanisms should have to in return forfeit their right to set compensation for themselves. Big business is shedding pension obligations at a frantic rate thru bankruptcies and the government gives them their blessing as they bail them out. I am all for a free market as long as congress is not for sale, as the wealthy and big business are the only ones with the means to buy
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