Microsoft introduces shareholder 'say-on-pay' vote

Stephen Withers
Monday, 21 September 2009 04:16

IT Industry - Listed Tech

The plan was developed in conjunction with representatives of shareholders that had put forward say-on-pay proposals, namely Calvert Investments, the United Brotherhood of Carpenters, and Walden Asset Management.

"We believe that establishing an advisory vote on compensation is a significant step in providing shareholders a voice on this important issue," said Aditi Mohapatra, sustainability analyst at Calvert Group.

"Given the interest in executive pay, we think it makes sense to encourage more dialogue with our shareholders on our compensation approach," said Brad Smith, Microsoft general counsel and board secretary.

"Our executive compensation program is designed to maximise shareholder value by attracting and retaining world-class leaders and aligning their financial rewards with the growth and success of the company," he added.

And there's the rub.

During boom times, individual shareholders don't really care how much executives are being paid, as long as they see sustained growth in the share price and/or dividends.

But faced with large paper losses or reduced dividends, they question the value those executives are delivering.

Institutional investors don't seem so bothered, possibly because their executive remuneration is set in a similar way and they don't want to rock the boat.

As illustrated by what's happened at Microsoft, the exceptions are generally pension funds run or influenced by by unions, or investment organisations that emphasise social responsibility.