Microsoft shareholders get say on pay (sort of)

So, how much do you reckon Steve Ballmer ought to earn? If you’re a Microsoft shareholder, you’ll get to decide – as long as you come up with a figure that the board approves of.

Shareholders are to be allowed to vote on the pay of its board members every three years, starting at this year’s annual general meeting on 19 November. The decision was revealed in its preliminary proxy statement, filed with the Securities and Exchange Commission on Friday afternoon.

“Given the interest in executive pay, we think it makes sense to encourage more dialogue with our shareholders on our compensation approach,” said Brad Smith, Microsoft general counsel and board secretary in a statement. “Our executive compensation program is designed to maximize shareholder value by attracting and retaining world-class leaders and aligning their financial rewards with the growth and success of the company.”

He said the decision had been reached after an approach by several of the company’s shareholders, including  Walden Asset Management, Calvert Investments and the United Brotherhood of Carpenters.

But it’s not quite as brave a move as it first might appear. The company says that if, say, the shareholders gang up and demand that Ballmer’s $666K salary be cut to 60 cents, it will “consult directly with shareholders to better understand the concerns that influenced the vote.” It won’t actually carry out the cut.

The move is obviously a sop to rising outrage about directors’ pay, both in the banking sector and elsewhere. The US House of Representatives has been looking at introducing legislation to give shareholders the right to a non-binding vote on directors’ pay.

Microsoft isn’t as lavish with its salaries as some – it doesn’t need to be, as its directors do very nicely from shares.