Investors forced Microsoft to publish the results of the Bill Gates investigation after a rare shareholder victory

Bill Gates speaks in Seattle in 2020. (Photo GeekWire / Todd Bishop)

After win support from Microsoft shareholders To be more transparent and independent in the company’s handling and disclosure of sexual harassment cases, an investor is calling on the company to make publicly available the results of an independent investigation into the company’s sexual harassment cases. past allegations against co-founder Bill Gates.

Natasha Lamb, managing partner of The capital Arjuna, who suggestion almost won 78% of shareholder votes.

Natasha Lamb, managing partner of Arjuna Capital.

The result at Microsoft’s annual meeting on Tuesday was a rare victory for a shareholder proposal. Corporate boards often oppose such proposals, as Microsoft did in this case. Shareholders vote against them more often than not.

However, the vote is advisory only, not binding.

Microsoft executives describe this as an important issue for the company. They are committed to releasing new data on sexual harassment investigations and complaints, and conducting an external review of the company’s processes for handling and investigating complaints. But they do not commit to full implementation of the proposal.

The proposal calls on Microsoft to release an annual report that “assesses the effectiveness of the company’s workplace sexual harassment policies, including the results of any comprehensive, independent audit/investigation.” Establish and analyze policies and practices and commit to creating a safe, inclusive work environment. ”

The proposal urges the company to “independently investigate and confront these issues in a transparent manner.” It says the annual report should include the results of any independent investigation of the allegations by law enforcement. ”

The proposal specifically addresses past allegations against Gates, came to light earlier this year. They included questions about the relationship between Gates and a Microsoft employee in 2000.

A Microsoft spokesperson previously said that a board committee in 2019 had “reviewed the concern, assisted by an outside law firm, to conduct a thorough investigation”. That doesn’t qualify as an independent investigation by Arjuna Capital’s definition of the term, Lamb said.

Gates resigned from the Microsoft board before the investigation was complete, The Wall Street Journal reported. A spokesman for Gates at the time said his decision was unrelated to the investigation.

Arjuna Capital’s proposal says sexual harassment and gender discrimination “can damage shareholder value – leading to higher revenue, lower productivity, increased absenteeism and expenses sick leave costs are higher”.

The clear majority vote in favor of the proposal is “an absolutely remarkable signal from the market and from institutional investors, that the ESG [Environmental, Social, and Governance] Issues like sexual harassment are important to the company and its investors,” Lamb said.

Discussing shareholder proposals during a live stream after the vote, Microsoft CEO Satya Nadella said it was important for the company to listen to feedback as part of its commitment to a growth mindset. grow, always learn and adapt.

Microsoft President Brad Smith called addressing sexual harassment an issue of “tremendous importance” to the company and its employees.

Microsoft CEO Satya Nadella, left, and President Brad Smith address questions from shareholders during a live stream in conjunction with the company’s annual meeting on Tuesday morning. (Screenshot via live stream.)

inside company authorization statement, Microsoft’s board of directors recommended that shareholders vote against the proposal, explaining that the company planned to begin issuing an annual report that would “fundamentally address the key themes identified in the specified in the shareholder’s proposal”.

The board also outlined Microsoft’s efforts to address sexual harassment within the company, including significantly expanding the company’s internal investigative capabilities; and training on issues of harassment and discrimination.

“There are new steps that we are going to take that we have in mind, and I think the resolution and the dialogue that we have had has helped us advance our decision-making process,” he said. .

Following the vote, Smith offered a preview of the types of data the company plans to release. For example, Microsoft received 51 complaints from employees during the recently ended fiscal year, he said; 47% proven.

Compared to 142 complaints filed the previous year, 49% of them were substantiated. Smith said the drop in total could be attributed to the shift to telecommuting.

Additionally, Smith said Microsoft “will have a third party perform an independent review of all the work we do to investigate these cases.”

He added, “We will share what that independent report says, and we will listen. And if there are recommendations to change, we will think twice about implementing them.”

Smith did not specifically address Gates’ allegations. Microsoft declined to provide additional information beyond its public statements. A representative for Gates declined to comment on the vote.

“I think it would be unfortunate if that was the extent of Microsoft’s response and they didn’t deliver on the main impetus of the proposal through some sort of technique or interpretation,” Lamb said by phone Tuesday afternoon. .

Four other shareholder proposals at the meeting were rejected. However, one of them called on the company to report the median salary gap by race and gender, which received 40% of the vote. It was also filed by Arjuna Capital.

“Honestly, this proposal is a good motivator,” Smith said of the median pay proposal. “You know, it was a good conversation. And so you’ll see us next year take even more steps to publish our average wage differential data globally. “

Speaking on the live stream, Smith described an overall shift in how shareholders interact with companies. He said there had been “almost a major shift” in the relationship between activist shareholders and large companies.

“We’ve realized that, in some ways, the nature of the conversation is even changing, not just at Microsoft, but more broadly,” he said. “We are seeing more shareholder groups emerge; they have more offers”.

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