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Shareholders approve Microsoft stock plan

They give their endorsement to the software giant's plan to start awarding restricted stock to employees instead of granting stock options.

Microsoft shareholders on Tuesday gave their endorsement to the software maker's plan to start awarding restricted stock to employees instead of granting stock options.

Some had objected to the plan, reportedly including a large pension fund, CalPers, but in the end a majority of shares were voted in favor of it, though Microsoft did not say how many.

During a question-and-answer session at Tuesday's shareholder meeting, one shareholder group spoke in favor of the idea generally, but raised questions about several aspects of the plan. These included the amount of stock that could be granted to any one individual as well as the performance criteria on which future stock grants will be given.

A shareholder proposal that would have prevented Microsoft from making direct charitable contributions failed after garnering just 1.96 percent of shares in favor.

Security was also a hot topic at the meeting, with Chairman Bill Gates offering the optimistic outlook.

"These are solvable problems," Gates said at the meeting, which was held in Bellevue, Wash., and broadcast over the Internet. "We can make the computer infrastructure as reliable as any infrastructure, and one we can rely on."

CEO Steve Ballmer, meanwhile, was more pragmatic, using the large group to reiterate Microsoft's recommendation that consumers use Windows XP with both the Internet connection firewall and auto-update features turned on.

The company also faced questions about the regulatory environment in Europe, where Microsoft faces a hearing this week on antitrust charges. Executives said the company is pursuing a dual-track strategy, defending itself in the litigation process while still trying to find ways of reaching a settlement.

The European Commission has said it is inclined to impose new conduct restrictions on the company, saying the software maker's abuse of its monopoly power is "ongoing." A three-day, closed-door hearing starts Wednesday in Brussels. "We look forward to the hearing," one executive said. "We welcome the opportunity to provide our point of view on these issues."

Asked about trends toward moving high-tech jobs overseas, Ballmer said that it would be "imprudent" for Microsoft to explore a more global work force, adding that the company has research and customer support operations in both India and China.

"We don't anticipate a wholesale migration of Microsoft offshore," he said, reiterating that the company sees advantages in concentrating its work force, particularly software development efforts, in Washington's Puget Sound region.

Shareholders also approved Microsoft's proposed slate of directors--including new members Charles H. Noski and Helmut Panke--increasing the size of the board from eight to 10 members.