Microsoft shareholders advised to vote against director Thompson

Mon Oct 28, 2013 9:55pm EDT
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By Bill Rigby

SEATTLE (Reuters) - Proxy advisory firm Glass Lewis has recommended that Microsoft Corp shareholders vote against the re-election of lead independent director John Thompson, who is in charge of the company's efforts to find a new chief executive.

In a note circulated to its clients on Monday, Glass Lewis expressed concerns about a possible conflict of interests for Thompson in his role as CEO of Virtual Instruments, a cloud-computing firm that sells licenses and devices to Microsoft.

Glass Lewis is one of two major companies which make recommendations to shareholders based on corporate governance guidelines, but its views are not necessarily heeded by large investors.

Microsoft representatives did not immediately reply to a request for comment.

Thompson, a former International Business Machines Corp executive, was appointed to Microsoft's board in February 2012 and elected by shareholders at the annual meeting later that year.

The company he runs, Virtual Instruments, was paid about $2.3 million last fiscal year by Microsoft for software licenses and hardware devices, which is less than 5 percent of Virtual Instruments' total annual revenue, according to Microsoft's annual proxy filing.

Microsoft said those purchases were negotiated "at arms-length" and at similar terms to Virtual Instruments' other customers. Despite that, Glass Lewis said Thompson's roles at both companies created a potential conflict, and classified him as an "affiliated" director as opposed to "independent", which it said makes him an inappropriate choice to lead the board.

Microsoft's next shareholder meeting is scheduled for November 19. Shareholders have three voting options, 'for', 'against' and 'abstain'. Under Microsoft's rules, a director is elected if the number of shares cast 'for' exceeds the number of votes cast 'against' a director.   Continued...

The Microsoft logo is seen at their offices in Bucharest March 20, 2013. REUTERS/Bogdan Cristel