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[XGNews]: Behind Microsoft’s announcement to review sexual harassment: Wall Street pressure technology companies to correct social ethics problems

The following is the [XGNews]: Behind Microsoft’s announcement to review sexual harassment: Wall Street pressure technology companies to correct social ethics problems recommended by xgapn.com.

It is reported that at the end of last year, when attending the general meeting of shareholders of Microsoft, the shareholder Natasha lamb put forward a proposal to require Microsoft to issue a public report on the effectiveness of the internal sexual harassment treatment system, and the general meeting of shareholders approved the proposal, which was beyond LEM’s expectation.

At that time, Microsoft opposed the proposal and urged shareholders to veto it, but Microsoft was defeated. It is this proposal that prompted Microsoft to officially announce last week that it will reassess the existing system to deal with sexual harassment and issue a report at the beginning of this year.

Arjuna capital is an investment company holding shares in Microsoft, and Lyme is the founding partner and investment manager of the company. According to the regulatory report, the value of Microsoft shares held by the company is about $20 million. After Microsoft’s announcement, Lyme told the press: “it’s extremely rare for my proposal to win a majority at the shareholders’ meeting.”

LEM said she was satisfied with a series of Microsoft announcements, including hiring an external law firm to conduct an independent evaluation and reviewing sexual harassment cases of some executives, including Microsoft co-founder and former CEO Bill Gates.

In the past, at the shareholders’ meeting of technology companies, the proposal on sexual harassment has almost never been voted on. However, shareholders’ support for such proposals is increasing. They pay more attention to the performance of Listed Companies in environmental protection, society and internal governance (ESG), and are willing to invest in companies that pay attention to these issues.

It is reported that since 2017, issues including internal sexual harassment and social equity have begun to attract the attention of shareholders.

Investment institutions such as ajuna are asking listed companies to disclose more about how they improve the diversity of employee recruitment and dismiss misbehaving personnel in addition to the old revenue growth and profit margin. For some directors who prevent listed companies from disclosing these issues, these institutions will vote no at the general meeting of shareholders.

According to the analysis report of “FTI consulting company”, from June 2020 to June 2021, a total of 29 shareholder proposals on environmental protection and social issues were adopted by a majority of votes at the shareholders’ meeting of listed companies, which was higher than 16 in the previous year.

Darla Stuckey, CEO of the American Corporate Governance Association, a non-profit organization, said that environmental and social issues are gaining more and more support at the shareholders’ meeting.

LEM said that the managers of some large investment institutions in the United States are putting pressure on listed companies, which began two or three years ago.

Lyme said that in history, investors such as pioneer pilot fund, Blackstone Group and State Street bank often did not vote on shareholder proposals such as ESG. They often followed the management of listed companies, but this is not what it used to be.

This kind of social concern has helped the development of ajuna company.

LEM said that the needs of investment customers are changing, and more investors begin to reflect on what social problems need to be adjusted and how they should invest. Under this trend, the customer funds absorbed by ajuna company have increased.

Microsoft is one of the listed companies that ajuna pays attention to social issues. Last year, a scandal broke out in the media that Microsoft co-founder gates sought to develop sexual relations with a female employee in 2000. Ajuna’s shareholder proposal also mentioned an employee class action lawsuit in 2012, when a total of 238 employees said they had been sexually harassed at Microsoft.

At last year’s shareholders’ meeting, Lyme submitted two proposals. In addition to issuing the sexual harassment policy evaluation report, she also asked Microsoft to analyze the salary differences of employees of different races and genders, which is also one of the concerns of ajuna company. They have submitted similar proposals at the shareholders’ meetings of more than a dozen other listed companies.

Starkey said that on the issue of unfair pay for male and female employees, Lyme was the industry pioneer who took the lead in paying attention. Lyme also achieved many successes, and listed companies listened to her opinions.

Key supporters

A few weeks before Microsoft’s shareholders’ meeting, Lyme began recording video of the proposal. She was wearing a white shirt, a black jacket and a necklace. At ajuna’s office outside Boston, she began recording videos calling on shareholders to support her proposal.

On the morning of November 30, Lyme’s video was broadcast at the shareholders’ meeting. Subsequently, Hossein nowbar, Secretary of Microsoft, appeared on the screen and called on all shareholders to veto Lyme’s proposal in accordance with the recommendations of the board of directors.

However, Lyme has powerful allies. Institutional shareholder services, an American investment consultancy, called on Microsoft shareholders to support ajuna’s proposal on sexual harassment reports.

“Institutional shareholder service” said that Microsoft is facing sexual harassment disputes, so it is necessary to ask Microsoft to issue a report to evaluate the effectiveness of the system for dealing with sexual harassment in office space. This report will help shareholders understand how Microsoft solves the risk of sexual harassment.

Subsequently, NABA announced the voting results and announced that the proposal on the introduction of an evaluation report on sexual harassment policy had been voted on. However, four other shareholder proposals (including ajuna’s proposal on wage injustice) were rejected.

After the announcement of the voting results, Brad Smith, President and vice chairman of Microsoft, said that some companies, including Microsoft, had realized that the theme of shareholder dialogue was changing. Microsoft has seen more shareholder groups emerge and put forward proposals on a wide range of topics.

The tone of Smith’s speech surprised lime. Because Microsoft tried every means to let her cancel the proposal and remove relevant contents from the shareholder proxy statement. However, in the face of resistance, Lyme was not discouraged. In her opinion, it is necessary to put forward this proposal at Microsoft after the exposure of Gates’ sexual harassment scandal.

Lyme said that it is obvious that ajuna needs to hand over the problem to Microsoft to let other shareholders see that such sexual harassment will not damage the Microsoft brand. For the company, they need to attract and retain talents. The competition for talents is a very fierce market. If Microsoft has a sexual harassment scandal and can not solve it actively and transparently, it will create an obstacle to attracting external talents.

At present, ajuna company manages a total of $400 million worth of assets. After Microsoft’s victory, LEM is paying attention to other holding companies.

Lyme said that in many technology companies, the number of female employees or employees of colored people is very small, which will lead to a problematic corporate culture. In addition, Microsoft is not the only technology company that broke out sexual harassment disputes.

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