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Microsoft shareholders back protest vote over sexual harassment claims

Microsoft’s shareholders have backed a protest vote calling on the company to reveal more about its handling of sexual harassment claims, in the shadow of recent cases and the revelation that co-founder Bill Gates had a relationship with a company employee.

The call amounted to a rare vote against management at the company’s annual shareholder meeting, and brought an immediate promise from Microsoft of more transparency. However, the company stopped short of saying it would reveal details about individual cases and it did not make any commitment to reopen its handling of cases from previous years.

The shareholder revolt followed years of complaints from some workers that the company had brushed pervasive claims of harassment under the carpet. Arjuna Capital, which submitted the shareholder proposal challenging management, said Microsoft’s human resources department upheld only one claim against the group out of a total of 238 that were included in a class-action lawsuit alleging discrimination and harassment in 2012.

“Reports of Bill Gates’ inappropriate relationships and sexual advances towards Microsoft employees have only exacerbated concerns, putting in question the culture set by top leadership, and the board’s role holding those culpable accountable,” it added.

Microsoft revealed earlier this year that its board had hired an external firm to look into a decades-old “intimate relationship” that Gates had with an employee. Gates stepped down from the board before an investigation was completed. The outcome of any investigation has not been revealed.

The shareholder vote deals a blow to Microsoft’s lofty reputation with investors focused on environmental, social and governance (ESG) issues. The group is the most widely held company in US ESG funds as of July, according to Bank of America.

Shareholder advisory groups ISS and Glass Lewis recommended investors back the Arjuna resolution, arguing that a failure to deal effectively with sexual harassment claims would hurt a company’s reputation and ability to hire, affecting its shareholders.

“There are new steps we are going to take that we were thinking about,” Brad Smith, Microsoft’s president, said after the vote. “I think the resolution, and the dialogue we’ve had, has helped us advance our decision-making.”

Smith said the company had been compiling more information internally on harassment claims and recognised that “shareholder interest” made it important to disclose more of this publicly as well.

As an example of the kind of disclosure it might make in future, he said that in Microsoft’s last financial year it had investigated 51 complaints and that 47 per cent were substantiated, compared with 49 per cent of the 142 cases investigated the year before. The decline in claims probably reflected the fact that more people were working from home, he added.

Smith also said Microsoft would commission an independent review of how it handles harassment claims and publish the results. However, he stopped short of promising the company would adopt any recommendations, saying only that it would “think hard” about making changes.

Smith said Microsoft would also publish more details on the company’s gender pay gap, despite shareholder rejection of a separate proposal on the issue. The company is already required to publish the date in the UK and would extend this globally, he added.

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