Microsoft Corporation (MSFT): a Year of Transition

Microsoft Corporation (NASDAQ:MSFT) recently released its annual corporate governance letter to its shareholders, which provides them a glimpse of the major transition that happened in Microsoft Corporation (NASDAQ:MSFT) over the course of past one year. The company’s stock has performed astoundingly well in this period, returning an impressive 31.35% year-to-date, which most people attribute to the change in focus that Satya Nadella has brought as Microsoft Corporation (NASDAQ:MSFT)’s new CEO.

Microsoft Corporation (NASDAQ:MSFT)

The main highlight of the letter is also the new CEO and the “technical and strategy shift” that he has brought across Microsoft Corporation (NASDAQ:MSFT)’s portfolio of product and services. It enumerates how the first six months of Nadella being promoted as the CEO can be defined by his pledge of making Microsoft Corporation (NASDAQ:MSFT) a “productivity and platform company for the mobile-first and cloud-first world.”

John Thompson, who was previously Lead Independent Director, became independent Chairman of Microsoft Corporation (NASDAQ:MSFT)’s in February, at the same time when Mr. Nadella was appointed as the CEO. Microsoft Corporation (NASDAQ:MSFT) reiterated in the letter that its emphasis on long term growth is unchanged while it optimizes itself for a mobile first and cloud first world.

The letter also highlighted that Microsoft Corporation (NASDAQ:MSFT) is committed to engaging with its shareholders and in the past one year, independent members of Microsoft Corporation (NASDAQ:MSFT)’s Board spoke with investors collectively holding over 30 percent of outstanding shares.

In the year gone by, Microsoft Corporation (NASDAQ:MSFT)’s Board saw an addition of two new directors, Mason Morfit, president of ValueAct Capital, joined the Board in March and John Stanton, an innovator par excellence in the U.S. wireless industry, joined the Board in July. Microsoft Corporation (NASDAQ:MSFT) also saw the departure of its board member, Stephen Luczo, in March this year.

The company also provided an insight into executive compensation, mentioning that Microsoft Corporation (NASDAQ:MSFT)’s stock ownership policy requires each covered executive to acquire and maintain ownership of the company’s shares, which range between three to ten times of the executive’s salary. Microsoft Corporation (NASDAQ:MSFT)  also has an executive compensation recovery policy under which the company may seek to recover payments of  incentive compensation ‘if the performance results leading to a payment are later subject to a downward adjustment or restatement of financial or nonfinancial performance’.

The full letter is available below:

Governance Letter 2014

 Disclosure: None

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