Microsoft Corporation: Case Review: Microsoft Corporate Governance?

MGMT 512 - CORPORATE GOVERNANCE, Aymelek Kozikoglu

Koç University, Graduate School of Management – MBA 2017

Exam II – MICROSOFT CORPORATE GOVERNANCE

by Okan Abdullahoglu June 11th, 2017

Microsoft is a company with a very structured corporate governance scheme although it was established

in a garage in 1975 as a typical start-up. In general understanding, companies with more than 60-70 years

of history and 2-3 generations of heritage are more likely to be associated with strong institutionalism,

consisting sustainable values that promote key principles for bigger, better days ahead.

The company became so humongous over the years that couldn’t be attributed only to the ideas that

flourished its growth but

On its website, under investor relations, Microsoft draws the governance framework as;

- Establishes and preserves management accountability to company owners by appropriately

distributing rights and responsibilities among Board members, managers, and shareholders

- Provides a structure for management and the Board to set objectives and monitor performance

- Strengthens and safeguards our culture of business integrity and responsible business practices

- Encourages the efficient use of resources, and requires accountability for stewardship of those

resources.

When we dig into the company’s board of directors, we see there are twelve individuals coming from

diverse backgrounds, combined mostly from different industries and approaches. With three women in

the board, Microsoft reaches twenty five percent gender diversity ratio which is far better than many

others from the same industry. All BoD members are selected according to some set of criteria. As it is

described, Governance and Nominating Committee annually determines appropriate characteristics,

In its history, Microsoft completed 175

acquisitions and made several other investments to major tech players, such as Apple and Facebook. There

was quite a lot rumors going around tech industry that Microsoft lays eyes on Nokia and Linkedin for M&A

activities. After a long and disguised period of negotiations, valuations and due diligence the rumors came

out to be true, and Microsoft acquired Linkedin for more than 26 billion US dollars. On the other side,

Microsoft wasted almost 8 billion for Nokia’s mobile business. The deal was handled under the

administration of the former CEO, Steve Ballmer, but with the change of CEO, the company shifted its

strategy away from producing devices. Under reluctant governance of Satya Nadella towards the business,

the mobile subsidiary lost lots of money and layoffs followed. Also in the past, some of its unfortunate

M&A activities earned Microsoft an infamous reputation over money spending.

Starting with the institutionalizing transformations Bill Gates formed the Board of Directors with various

backgrounds and to the point selections of executives which has strong business development,