Microsoft hails year of ‘solid progress’

Share price hovering near all-time highs

Seattle — Microsoft Corp. executives struck an upbeat tone at the company’s annual shareholders meeting on Wednesday, touting signs of success in the company’s campaign to remain relevant in a fast-changing technology world with a new generation of software tools.

“This last year has been a year of solid progress at Microsoft,” CEO Satya Nadella said at the event, attended by a few hundred shareholders and company officials

Nadella, who earned his master’s degree in computer science at the University of Wisconsin-Milwaukee, led Wednesday’s meeting along with Microsoft President Brad Smith, a Wisconsin native who attended high school in Appleton. Smith recently spoke at Marquette University about how “intense curiosity” has fueled Microsoft’s innovations.

In contrast to the era in which many shareholder questions circled Microsoft’s stagnant stock price, the company, headquartered outside Seattle, is set to end 2016 on a high note.

Microsoft’s share price is hovering near all-time highs, aided by growth in the company’s cloud-computing units. Shareholder-friendly policies, including billions of dollars paid out annually in dividends and share buybacks, have also helped buoy shares.

The company generated $85.3 billion in revenue, $52.5 billion in gross margin and $20.2 billion in operating income over the past fiscal year. Of note:

Commercial cloud annualized revenue run rate exceeded $12.1 billion, up more than 50% year-over-year.

More than 70 million people use Office 365 commercial every single month.

Revenue from the compa-

ny’s cloud platform, Azure, grew triple digits, with usage of key computing and database workloads more than doubling year-overyear.

Windows 10 is now active on more than 400 million devices around the world and has over 197 billion hours of usage. This is the fastest adoption rate of any prior Windows release.

Shareholders voiced their approval of the company’s direction in their near unanimous re-election of the board of directors. Microsoft’s slate of board of directors candidates were all approved with more than 98% of votes cast.

The board’s composition last changed a year ago with the appointment of Johnson & Johnson executive Sandra Peterson, and a former Cisco executive, Padmasree Warrior.

The addition of two women to the board, replacing the retiring Maria Klawe, made Microsoft’s directors a bit more diverse. But the company as a whole hasn’t fared as well, recently reporting a second consecutive annual decline in the portion of women employed by the company, and muted gains in the share of underrepresented minorities.

Nadella said the company had been bringing in more diverse classes of university graduates recently, “but we need to do more, both at Microsoft and across our industry.”

Shareholders also voiced approval for Microsoft’s evolving executive compensation practices, a break from past years. The company said 95% of shareholder votes were to approve the symbolic advisory vote on executive pay.

In each of the past two years, shareholders delivered Microsoft a rebuke on the company’s pay practices, which critics said included too many giant stock grants and were only loosely connected to the company’s performance. Those grants included a giant package, valued by an independent shareholder advisory firm at more than $90 million, to Nadella after he was named CEO in 2014.

Since then, Microsoft has moved to tie more of executives’ pay to Microsoft’s business goals and financial performance.

Microsoft is close to completing its $26 billion acquisition of LinkedIn.

Absent from the room on Wednesday were Bill Gates, Microsoft’s co-founder and current board member, and Steve Ballmer, the ex-CEO who remains a major shareholder. Technology news site GeekWire reported that both had prior commitments preventing them from attending.