The software giant has just unveiled a change to its Corporate Governance Guidelines, targeted at independent directors. Those outside members will now have „an average tenure of 10 years or less“.
Though it’s not often we get a glimpse at the less exciting aspects of Microsoft’s day-to-day operations, a recent change in the company’s policy regarding board members does deserve some discussion.
In a post from its On The Issues blog, the Redmond giant stresses the subject of term length for outside members of its board of directors. Most commonly called independent directors, these particular people are not part of the executive management team, the highest level of an organization’s management structure.
One of the key characteristics for qualifying as an independent director is the absence of any „material or pecuniary [monetary] relationship with company or related persons“. This means, according to Microsoft’s Corporate Governance Policies, that whoever is being considered for the spot mustn’t be in a position that, „in the opinion of Microsoft’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.“
Due to the subject of tenure receiving increased attention from investors, Microsoft stated:
The reason for this change is that an absence of a limit could end up „producing an overly close relationship between long-serving directors and management.“ Among others, the idea that more experienced directors could provide historical context was also considered in this decision, as was the fact that those folks can be „better positioned to oppose management.“
Microsoft’s Board of Directors currently has 12 members, ten of which are independent. The non-independent members are of course co-founder Bill Gates, and acting CEO Satya Nadella. For those curious about his absence, former CEO Steve Ballmer stepped down as a member three years ago.
