A double victory for Microsoft shareholders!

Arjuna Capital ended 2021 on a high note, adding two more wins to its credit at the Microsoft Annual General Meeting. A majority of shareholders joined the investment management company in urging the digital giant to improve its transparency over its handling of sexual harassment complaints, while several also called for disclosure of its median pay gaps by gender and race.

About 78% of shareholders approved a proposal that required Microsoft to publish a report "assessing the effectiveness of the company’s workplace sexual harassment policies, including the results of any comprehensive independent audit/investigations, analysis of policies and practices, and commitments to create a safe, inclusive work environment."

Taking note of the result of this non-binding vote, the company's President, Brad Smith, said that Microsoft will put in place new measures to enhance its transparency. The company will share more quantitative data, such as the number of complaints received and the percentage of justified complaints. Mr. Smith also revealed that for the fiscal year that ended in June 2021, 47% of the 51 complaints filed by employees were well-founded. In addition, Microsoft will engage a third party to conduct an independent evaluation of all work done to investigate these complaints in order to ensure the effectiveness of its investigations. Management has also promised that the evaluation report will be made public and that its recommendations will be the subject of serious reflection.

In the opinion of Natasha Lamb, Managing Partner at Arjuna Capital. "the fact that executives responded so quickly following the vote is a sea change from how Microsoft has dealt with this issue in the past." She adds that "while the accusations against Bill Gates are only the latest revelations in what has been a long-seated, poorly managed problem, it’s significant that Microsoft is now listening to its shareholders and committing to transparent, unbiased, independent reporting."

Indeed, we recall that in recent years, alleged cases of sexual harassment in the workplace have drawn negative attention to the company. Several criticized it for failing to deal adequately and transparently with certain complaints and for failing to meet its commitments to improve its human resources processes and to report on the implementation of sexual harassment and gender discrimination policies. The adoption by shareholders of Arjuna Capital's proposal and management's statements following the vote now gives us hope that Microsoft will live up to its recent promises and provide investors with information that will allow them to better assess the company's risks and its efforts to address harassment and discrimination.

Finally, it should be noted that although Arjuna Capital's second proposal was not adopted, the approval rate was high enough (40%) to encourage management to respond favourably. Acknowledging the importance of the issue raised by the investment management company, Smith said that "this proposal was frankly a good nudge" and that Microsoft will take more steps next year to make public its median pay gap data for its global workforce. The company will thus join the still small group of companies that have adopted the best practice of reporting both gross and adjusted pay equity gaps.

Sources: Arjuna Capital, Investors cast 78% majority vote pressing for sexual harassment accountability at Microsoft annual meeting, November 30, 2021, ref. December 14, 2021, https://bit.ly/3dSF0ru ; Microsoft Corporation, Microsoft Annual Shareholders Meeting, November 30, 2021, ref. December 14, 2021, https://bit.ly/3GGEfxO