In a significant move highlighting global investor scrutiny, Norway's colossal sovereign wealth fund has cast votes against two key proposals concerning Microsoft's leadership. The fund, valued at over $2 trillion, opposed the re-election of CEO Satya Nadella as the chair of the Microsoft board and also voted against his substantial compensation package during the company's annual shareholder meeting held on December 5.
Why Norway's Fund Took a Stand
The virtual shareholders' meeting saw the Norges Bank Investment Management, which runs the Norwegian fund, align its votes with its long-standing governance principles. The fund has a general policy of opposing a corporate structure where the same individual holds the positions of CEO and board chair, arguing it can weaken checks and balances. This principle directly informed its vote against Nadella continuing in the dual role.
Regarding the compensation, the fund expressed its recurring concern about excessive executive pay in American corporations. It advocated for a larger proportion of long-term, locked-in share awards in remuneration packages. "A substantial proportion of annual remuneration should be provided as shares that are locked in for five to ten years, regardless of resignation or retirement," the fund stated, explaining its opposition to Nadella's pay deal.
Microsoft Shareholders Deliver Overwhelming Approval
Despite the high-profile dissent from one of its major investors, Microsoft's shareholder base overwhelmingly supported all company proposals. This included a strong advisory vote in favour of the executive compensation plan, which grants Satya Nadella a package worth $96.5 million for fiscal 2025. This marks a 22% increase from the previous year, largely propelled by stock awards linked to Microsoft's soaring share price.
The company's board cited exceptional progress in artificial intelligence (AI) and a stock surge of 23% in 2025, with shares doubling over three years, as key justifications for the record-high pay package. The Norway fund, which owns a 1.35% stake worth $50 billion in Microsoft as of June 30, remains the tech giant's eighth-largest shareholder, with Microsoft being its second-largest equity holding after Nvidia.
The Bigger Picture for Corporate India
This event underscores the growing influence of large, principles-driven global investors on corporate governance standards worldwide. For Indian companies with significant foreign institutional investment (FII), especially those listed on global exchanges, such scrutiny on board independence and executive compensation is increasingly relevant. The stance taken by the Norwegian fund serves as a benchmark for governance expectations that transcend borders.
While Nadella's leadership continues to receive robust endorsement from the broader Microsoft shareholder community, the vote from the world's largest sovereign wealth fund signals that even top-performing executives at leading tech firms are not immune to critical evaluation on governance structure and pay fairness.
