The Most Repulsive Shareholder Proposal Ever

I’ve read a lot of shareholder proposals over the years on a wide range of issues, both those that made it into proxy statements and those that were validly excluded. Some of them have been wacky, misguided, and promoting issues that have nothing to do with corporations or the capital markets. But the proposal submitted at Microsoft Corporation by the National Legal and Policy Center (NLPC) this year may be the most repulsive one I’ve ever seen. Not only does it push a contrived narrative about employee choices over abortion, but it goes further to fan the flames of hatred being blasted towards transgender people--a trending tactic that seems to be a perversely enjoyable activity for an extremist slice of America.

Why is this proposal, which delves into the specifics of Microsoft’s employee benefits programs, even in the company’s proxy statement? How is this worthy of a shareholder vote? It appears that Microsoft did not seek No Action from the SEC to exclude the proposal from its proxy statement, and it is safe to assume they concluded that it would be a waste of time and resources now that Staff Legal Bulletin 14L has made shareholder proposals that invoke the “significant policy issues” exception to the ordinary business exclusion bullet proof (see my previous post about this).

This proposal marks a new low for the NLPC and the anti-ESG movement. It is deplorable in every sense of the word.

Here are the text of the shareholder proposal and proponent’s supporting statement and the company’s opposition statement as they appear in the proxy statement.

Proposal 5: Report on Gender-Based Compensation and Benefit Gaps (Shareholder Proposal)

National Legal and Policy Center has advised us that they intend to submit the following proposal for consideration at the Annual Meeting.

Gender-Based Compensation/Benefits Gaps and Associated Risks

WHEREAS: Compensation and benefits inequities persist across employee gender categories, and pose substantial risk to companies and society at large.

Women who choose not to abort their pre-born children, and instead decide to raise them, suffer a pay/benefits inequity compared to their company colleagues who do choose to abort their children and who receive reimbursements for expenses such as travel and lodging, when the procedures are done in a different state from where they reside for legal or other reasons.

There is significant expense both in aborting and in raising children, yet Microsoft Corporation (the “Company”) incentivizes the former with a subsidy and discourages the latter with no subsidy.(1) In fact, the latter incurs far greater expense and necessity of time out of the workplace than the former, exacerbating the compensation/benefits gap. Such policies have significant societal, operational, reputational, and competitive risks, and risks related to recruiting and retaining diverse talent.

Similarly, the Company provides health benefits to employees who suffer gender dysphoria/confusion, and who seek medical, chemical, and/or surgical treatments to aid their “transition” to their non-biological sex. The Company reports, “Not only was Microsoft an early leader in including sexual orientation in its corporate non-discrimination policy, but it continues to evolve to support employees – for instance, by broadening its health benefits to encompass medical needs for US-based transgender employees and their transgender dependents.”(2)

The Company has staked out a position on gender dysphoria/confusion which affirms that sufferers can transition to a different sex, both psychologically and physically. Yet an increasing body of scientific evidence shows distinct harms actually result from medical and surgical “transition” treatments. Examples include various long-lasting side effects like chronic pain, sexual dysfunction, unwanted hair loss and hair gain, menstrual irregularities, urinary problems, and other complications.(3) Rather than resolve mental health problems, such “gender affirming” care instead often exacerbates them. In such instances, patients who desire to “de-transition” cannot find medical or insurance coverage that they need. Many of these sufferers litigate against those who misled or mistreated them regarding the necessity and alleged “success” of “transition” therapies.(4)

Resolved: Shareholders request Microsoft report on median compensation and benefits gaps across gender as they address reproductive and gender dysphoria care, including associated policy, reputational, competitive, operational and litigative risks, and risks related to recruiting and retaining diverse talent. The report should be prepared at reasonable cost, omitting proprietary information, litigation strategy and legal compliance information.

---

(1) Hill, Bailee. “Company offers ‘baby bonus’ for employees in effort to combat ‘anti-family’ push towards abortion,” FoxNews.com, June 18, 2023. See https://www.foxnews.com/media/company-offers-baby-bonusemployees-effort-combat-anti-family-push-towards-abortion.

(2) Whitney-Morris, Candace. “The rainbow ripple effect: how Microsoft and its LGBTQ+ employees push for change across borders,” Microsoft.com, June 1, 2018. See https://news.microsoft.com/life/pride.

(3) Bolar, Kelsey. “‘Detransitioners’ Are Being Abandoned By Medical Professionals Who Devastated Their Bodies And Minds,” The Federalist, Feb. 10, 2023. See https://thefederalist.com/2023/02/10/detransitioners-are-beingabandoned-by-medical-professionals-who-devastated-their-bodies-and-minds/.

(4) Shellenberger, Michael. “Why This Detransitioner Is Suing Her Health Care Providers,” Public.substack.com, March 22, 2023. See https://public.substack.com/p/why-this-detransitioner-is-suing.

Board Recommendation

The Board of Directors recommends a vote AGAINST the proposal for the following reasons:

COMPANY STATEMENT IN OPPOSITION

The proponent requests Microsoft report on median compensation and benefits gaps across gender “as they address reproductive and gender dysphoria care.” Microsoft already provides pay equity and median gender and racial pay gap reporting. Based on the language of the proposal, the request for additional reporting appears to stem from animosity towards certain reproductive and gender-related health benefits. We strongly believe the requested report is unnecessary given Microsoft’s strong existing pay disclosures and the comprehensive and inclusive set of benefits we provide to Microsoft employees. We further believe such reporting would be counter-productive to our efforts to recruit and retain diverse talent.

As a baseline of our existing pay disclosures, Microsoft has reported on pay equity since 2016 in support of our commitment to pay employees equitably for substantially similar work. To further highlight the opportunity to continue to make progress on representation at all levels of the Company, in our 2022 Global Diversity and Inclusion Report, we began disclosing the unadjusted differences in median total pay for women inside and outside of the U.S., and for racial and ethnic minorities, Asian, Black and African American, and Hispanic and Latinx employees in the U.S.

In terms of the benefits we offer, we believe it’s our responsibility to create an environment where people can do their best work – a place where they can proudly be their authentic selves, and where they know their needs can be met. We are constantly listening to employee feedback to establish and evolve our benefits that creates a more diverse and inclusive environment and recognizes the importance of employees to the continued success of Microsoft. We’ve worked to align our benefits to our culture, as guided by this priority, evolving them to be more holistic and inclusive.

Our industry-leading employee benefits include but are not limited to health care benefits that rank amongst the top in our industry. Far from the assertions raised in the proposal, Microsoft offers comprehensive health and wellbeing benefits for families such as paid vacation, paid sick leave, paid time off for new parents, fertility, adoption and surrogacy assistance, birthing, doula and postpartum support, caregiver leave, subsidized childcare, and more. Indeed, Microsoft places enough importance on the business benefits of paid parental leave that in 2018 we launched a new policy to ensure our U.S. suppliers offer their employees a minimum of 12 weeks paid parental leave for their employees doing significant work for Microsoft.

As part of our commitment to inclusive benefits, Microsoft will continue to lawfully support our employees and their enrolled dependents in accessing critical healthcare regardless of where they live across the U.S., which includes travel expense assistance for lawful medical services where access to care is limited in availability in an employee’s home geographic region.