Monday, October 23, 2006

The proxy and you

The saying goes that a picture is worth a thousand words. So let me submit this particular one, from MSFT's current proxy statement:

The net message? MSFT has underperformed the S&P 500 index for 5 years now, and the NASDAQ for the past 3. Note that this is despite MSFT assuming dividend reinvestment for the calculation - including, principally, the record-setting but financially-irresponsible $3 one time - and some $40-50B of shareholder-owned cash having been poured into buybacks during that period. Worse, this brutal record of underperformance is getting more pronounced. That might be less obvious from the simplistic and advantageously drawn chart supplied by MSFT. Let's take a look at how the chart would look drawn to scale and w/o including the dividend reinvestment component:

Hmmm, now that looks even more concerning doesn't it?

The proxy is the one chance each year for you as a shareholder to have your ownership voice heard. Don't do like most folks and simply check it off w/o reading it, or round file it, assuming your voice doesn't matter and/or that someone else will provide the appropriate feedback. Sit down, review the track record, and ask yourself whether this is the kind of performance that should be expected, is deserving of the $1B in bonuses that the management team recently treated themselves to, and is worthy of your continued support. If so, then by all means go ahead and give management the rubber stamp. If not, send a strong message that this is unacceptable by withholding support for some/all of the proposed officers and directors. And btw, that means employee shareholder owners as well. You have a vote too - use it.

The management team, though they seem to have forgotten it, have a fiduciary responsibility to look out for our best interests and increase our wealth - not theirs at our expense. If they haven't done that, and imo that's clear from the evidence, then it's time for a change. Indeed, change is long overdue. But don't expect change if you're too lazy to do your part and make your voice heard. After all, the caption above the chart says:

Note: Microsoft management cautions that the stock price performance shown in the graph below should not be considered indicative of potential future stock price performance.

Somehow, I don't think they're cautioning you that it might get better...


  • I hear ya brother...nothing much to add here, but that all rumors are that we are going to project flat (or no) growth now for this year and next. Earnings are going to be a nightmare.

    By Anonymous Anonymous, at 11:10 PM  

  • Here's a big head scratcher

    By Anonymous Anonymous, at 4:09 PM  

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