Microsoft investors encouraged to drop director

Oct 30, 2013
<p>Glass Lewis advises shareholders to vote against re-election of lead independent director&nbsp;</p>

Microsoft’s shareholders have been advised by proxy advisory firm Glass Lewis to vote against the re-election of the company’s lead independent director, John Thompson.

Thompson, who is currently responsible for recruiting a new chief executive at the technology company, is also CEO of Virtual Instruments, a cloud-computing firm that sells software licenses and devices to Microsoft. In a research note sent to its clients on Monday, Glass Lewis said it was concerned a conflict of interest might exist for Thompson when making important decisions about Microsoft’s future.

Formerly an executive at IBM, Thompson was appointed to Microsoft’s board in February 2012 before being elected by shareholders at an annual meeting later that year. Shareholders have been encouraged to re-elect the firm’s eight other directors – including CEO Steve Ballmer and chairman Bill Gates – at the next investor meeting, scheduled for November 19.

Ballmer announced earlier this year that he will retire as CEO over the course of the next 12 months, prompting a search for a new leader, which Thompson currently leads. It remains unclear whether Ballmer will keep his seat on Microsoft’s board after his retirement, though he has made it clear he intends to remain an active shareholder.

Separately from Glass Lewis’ suggestions, some investors have proposed that Gates step down from his role as chairman, claiming he is preventing necessary and radical reform at the firm, in light of Apple and Google’s growing influence in the mobile device market, in particular.

As one of the largest proxy advisory firms, Glass Lewis often makes recommendations to shareholders centered on corporate governance guidelines. Its advice, however, is not always heeded, especially by larger investors; in January, Siemens shareholders voted 91 percent in favor of retaining supervisory board chairman Gerhard Cromme, despite Glass Lewis’ recommendations to the contrary.

Earlier this month, NASDAQ asked for new rules to oblige proxy advisory firms to disclose any formulas or models used to arrive at their recommendations, after the exchange found the influence of such firms could discourage companies from going public.

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