During the discussions with shareholders, Microsoft came to know that some shareholders are concerned that extended service risks eroding director independence by producing an overly close relationship between long-serving directors and management. Some other shareholders thought longer service of directors can help bridge management transitions by providing historical context and perspective, and they may be better positioned to oppose management when needed. To address this issue, Microsoft’s board today announced a new board tenure policy that targets an average tenure of 10 years or less for the board’s independent directors.
While some have argued for bright-line term limits for outside directors, we believe the appropriate approach for Microsoft is a framework that balances a board composed of directors with extensive knowledge about Microsoft, those who can provide a fresh perspective and those with business experience relevant to our strategic ambitions. Our decision was influenced by the perspective of our investors who actively promote board refreshment and diversity at their portfolio companies.
Microsoft also highlighted that their board is now more diverse than ever, with women and ethnic minorities holding five of 12 board positions. In the end, Microsoft’s intention is to maintain a board with diverse backgrounds and experiences that matches the evolution of the company. Learn more about this announcement here.