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Microsoft gives shareholders 'say on pay'

Company's board agrees to give shareholders an advisory vote on executive compensation every three years.

Microsoft's board on Friday voted to give shareholders more say in how the software maker pays its executives.

The board of directors approved a plan that calls for a vote on the company's executive compensation every three years. However, under the board's plan, the vote will be advisory in nature.

The first of the advisory measures is set to be a part of this year's shareholder meeting, which takes place November 19.

"Given the interest in executive pay, we think it makes sense to encourage more dialogue with our shareholders on our compensation approach," Microsoft general counsel and board secretary Brad Smith said in a statement.

In theory, of course, shareholders could propose such votes more often, or submit other measures related to executive pay.

Unions, shareholder groups, and others have begun pressuring a number of large companies for greater say in how the companies pay their workers and executives. Microsoft said it worked with a number of its shareholders in developing its approach, including several entities that had submitted proposals related to this issue, such as Walden Asset Management, Calvert Investments, and the United Brotherhood of Carpenters.

"We believe that establishing an advisory vote on compensation is a significant step in providing shareholders a voice on this important issue," Calvert Group sustainability analyst Aditi Mohapatra said in a statement.

In 2008, Apple shareholders approved a non-binding resolution asking the board to give them greater input on executive compensation matters.