|
Progressive Wealth
Management Since 1990 |
Shareholder Rebuttal to Microsoft Corporation
Opposition Statement
Regarding “Eliminating Discrimination
through Inclusive Hiring”
240.14a-103 Notice of Exempt Solicitation
U.S. Securities and Exchange Commission, Washington
DC 20549
NAME OF REGISTRANT: Microsoft Corporation
NAME OF PERSON RELYING ON EXEMPTION: NorthStar Asset Management, Inc.
ADDRESS OF PERSON RELYING ON EXEMPTION: 2 Harris Avenue, Boston MA
02130
Written materials are submitted pursuant to Rule 14a-6(g)(1) promulgated
under the Securities Exchange Act of 1934.*
*Submission is not required of this filer under the terms of the Rule,
but is made voluntarily in the interest of public disclosure and consideration of these important issues.
Microsoft Fails to Address Racial Equity in
its
Proposed Fair Chance Employment Practices.
Shareowners are encouraged to vote FOR Shareholder Proposal
2 (proxy item #5):
RESOLVED: Shareholders request that the Board of Directors
prepare a report analyzing whether Microsoft hiring practices related to people with arrest or incarceration records are aligned with
publicly stated DEI (diversity, equity, and inclusion), racial equity, or criminal justice reform goals, and other public statements such
as the Fair Chance Business Pledge. The report, prepared at reasonable cost and omitting proprietary information and published publicly
within one year, is recommended to evaluate the risk of discrimination, including racial discrimination, that may result from failure
to implement targeted fair chance employment practices.
Summary:
Fair chance employment is the intentional recruitment of justice-involved
individuals (people with arrest or incarceration records). Due to the fact that Black and Brown people are disproportionately affected
by the criminal justice system, the Proponent believes that a racial equity lens must be considered when pursuing fair chance employment.
While Microsoft (“the Company”) has taken some steps towards creating pathways for justice-involved people, the Proponent
feels that the Company continues to disregard a key component of the Proposal – an examination of the racial and ethnic makeup
of fair chance hires – to ensure that racial equity is addressed.
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card; the Proponent is not able to vote your proxies, nor does this communication contemplate such an
event. The Proponent urges shareholders to vote YES on Shareholder Proposal 2 (proxy item #5) following the instruction provided on the
management’s proxy mailing.
PO Box 301840, Boston
MA 02130 | 617-522-2635 |
www.northstarasset.com
Where creative shareholder engagement
is a positive force for change.TM
What is fair chance employment?
Fair chance employment goes beyond “ban the box”1
or a policy to delay a background check until after a conditional offer is made. These are critical first steps, but fair chance
employment describes a constellation of practices based upon the recognition that jobseekers with criminal records should be actively
recruited and supported.
Fair chance employment practices can include creating internships aimed
at justice-involved people, partnering with local reentry organizations, internal workshops aimed at reducing stigma towards people with
criminal records, direct-hire opportunities for in-prison or post-incarceration training programs, or considering other ways to find,
recruit, and train people with arrest or incarceration histories who might not otherwise be able to apply for a job at the Company.
Why do we need racial equity in fair chance employment?
Harvard library’s resource webpage on racism in criminal justice
opens with this preamble: “From a ‘War on Drugs’ that disproportionately targeted Black people, to mass incarceration
and over-policing in majority Black neighborhoods — the American criminal justice system’s violence and inequality toward
Black Americans is fueled by a long history of racism”2
[emphasis added].
Acknowledging that the criminal justice system is “fueled by
a long history of racism,” the Proponent asserts that we must consider issues related to the U.S. criminal justice system through
a DEI (diversity, equity, and inclusion) perspective. Failing to do so in the instance of fair chance employment, in the opinion of the
Proponent, risks fueling the structural racism that already exists in hiring practices.
For example:
| · | Black Americans comprise 13% of the U.S. population but make up almost 40% of the incarcerated population.3 |
| · | Studies have shown that the existence of a criminal record can reduce job callbacks by at least 27% overall, while Black American
men see a 65% reduction in job callbacks if they have a criminal record.4 |
| · | Black women are significantly affected: the unemployment rate for Black women with criminal records is 37 percentage points higher
than their general population peers (Black women without criminal records).5 |
_____________________________
1 “Ban the box”
has been a nationwide movement to remove the checkbox from job applications that require applicants to disclose whether or not they have
a criminal record. “Nationwide, 37 states and over 150 cities and counties have adopted what is widely known as ‘ban the box’
so that employers consider a job candidate’s qualifications first—without the stigma of a conviction or arrest record.”
http://www.nelp.org/publication/ban-the-box-fair-chance-hiring-state-and-local-guide/
2 https://library.harvard.edu/confronting-anti-black-racism/criminal-justice
3 https://www.bop.gov/about/statistics/statistics_inmate_race.jsp
4 https://www.uschamber.com/assets/archived/images/uscc_business_case_for_cj-second_chance_hiring_report_aug2021.pdf
5 https://www.prisonpolicy.org/reports/outofwork.html
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card; the Proponent is not able to vote your proxies, nor does this communication contemplate such an
event. The proponent urges shareholders to vote YES on Shareholder Proposal 2 (proxy item #5) following the instruction provided on the
management’s proxy mailing.
PO Box 301840, Boston
MA 02130 | 617-522-2635 |
www.northstarasset.com
Where creative shareholder engagement
is a positive force for change.TM
Bias against formerly incarcerated people of color exacerbates existing
racial disparities and increases economic inequality between racial groups. This exacerbation can lead to greater economic instability,
reduced spending power, loss of GDP, and higher risk of re-incarceration.
Based upon these understandings, the Proponent believes that any policies
related to recruitment and hiring of people with criminal records must be examined with racial equity in mind.
Why are Microsoft’s actions not fulfilling the proposal?
The Proposal does not simply seek a report on improvements to recruitment
practices related to fair chance employment but specifies that, in order to fulfill the aims of the Proposal, the analysis should be in
comparison to public statements such as the Company’s DEI policies and goals. In the opinion of the Proponent, Microsoft has not
addressed any racial justice issues in its description of its practices.
While Microsoft states in the addendum of the opposition statement
that it “share[s] the proponent’s concerns about racial justice,” the Proponent believes that, without data on the race
or ethnicity of the justice-involved people the Company hires, the Company cannot know if its hiring practices of justice-involved individuals
perpetuate structural racism or work towards the Company’s own racial equity goals.
As noted above, the Proponent believes that the systemic issue of structural
racism in the criminal legal system cannot be divorced from inherent racism faced by job seekers of color who have criminal records. Therefore,
the Proponent feels that Microsoft is not addressing a significant systemic risk in its practices.
Why does this matter for Microsoft?
| 1. | Product involvement: In the opinion of the Proponent, fair chance hiring is a racial equity and DEI (diversity, equity,
and inclusion) issue and is tied directly to the Company’s own goals and initiatives. Microsoft’s technology – such
as facial recognition artificial intelligence – has been used by law enforcement in ways that advocates claim can harm people of
color. The ACLU calls facial recognition technology “anti-Black” and explains that “one false match can lead to a wrongful
arrest, a lengthy detention, and even deadly police violence.”6
While Microsoft has joined with other tech firms to halt sales of facial recognition technology to police in the United States, the Company’s
history of influence in this field may endure. |
| 2. | Fair Chance Business Pledge: Microsoft’s statement that it has taken actions such as delaying background checks
until after conditional offers of employment are merely the company taking action that is already required by at least 36 states and the
District of Columbia,7 and very soon
would be required of the Company due to its status as a federal contractor. 8
The Proponent asserts that these actions do not fulfill best practices in fair chance employment – or the Fair Chance Business Pledge
that the Company signed – that seeks innovative action to employ people with criminal records. |
_____________________________
6 https://www.aclu.org/news/privacy-technology/how-is-face-recognition-surveillance-technology-racist
7 https://www.ncsl.org/research/civil-and-criminal-justice/ban-the-box.aspx
8 https://banthebox.net/what-is-ban-the-box/
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card; the Proponent is not able to vote your proxies, nor does this communication contemplate such an
event. The proponent urges shareholders to vote YES on Shareholder Proposal 2 (proxy item #5) following the instruction provided on the
management’s proxy mailing.
PO Box 301840, Boston
MA 02130 | 617-522-2635 |
www.northstarasset.com
Where creative shareholder engagement
is a positive force for change.TM
| 3. | Labor market concerns: The tech labor pool continues to be extremely tight. Microsoft’s president Brad Smith described9
this problem in July of this year. Due to various labor constraints, tech companies face continued labor shortages. Research shows that
justice-involved individuals can make excellent employees, which could help solve the industry’s labor crisis. |
For example, Dave’s Killer Bread, a manufacturer of
organic bread that is now owned by Flowers Foods, is a well-established fair chance employer. According to a 2015 study by Portland State
University that compared employees at Dave’s Killer Bread over a three-year-period, people with criminal backgrounds outperformed
those without in three categories: attendance, policy, and behavioral violations. Employees with a criminal background were also promoted
faster.10
Fair chance employment could be a major differentiator for
the Company in its recruitment practices in the face of the labor shortage as well as a driver of long-term value.
| 4. | Allegations of racial discrimination can harm brand name and reputation: Even the U.S. Equal Employment Opportunity
Commission (EEOC) Enforcement Guidance acknowledges that “African Americans and Hispanics are arrested at a rate that is 2 to 3
times their proportion of the general population” and that “[n]ational data supports a finding that criminal record
exclusions have a disparate impact based on race and national origin” [emphasis added]. |
The Proponent believes that shareholders would be well-served
through an examination of Company fair chance employment practices as compared to DEI goals in order to protect the Company and shareholders
from financial risk of any potential discrimination litigation from job seekers who feel that the Company has not followed EEOC guidance
on this issue.
Conclusion:
Because the issues of criminal justice reform and racial equity are
tied together, the Proponent believes that fair chance employment practices also relate to the Company’s commitments on racial equity.
In the Proponent’s opinion, failing to address the Company’s own stated commitment on an issue that relates to so many key
initiatives at the Company is a clear risk to brand name and therefore shareholder value.
Shareholders, we urge you to vote “FOR” Shareholder Proposal
2 (proxy item #5). Please direct proposal-specific questions to Mari Schwartzer, Director of Shareholder Activism and Engagement, at mschwartzer@northstarasset.com.
_____________________________
9 https://www.reuters.com/technology/microsoft-president-sees-new-era-stagnating-labor-pool-2022-07-18/
10 https://www.honestjobs.co/post/myth-hiring-people-with-criminal-records-will-result-in-underperformance
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card; the Proponent is not able to vote your proxies, nor does this communication contemplate such an
event. The proponent urges shareholders to vote YES on Shareholder Proposal 2 (proxy item #5) following the instruction provided on the
management’s proxy mailing.
PO Box 301840, Boston
MA 02130 | 617-522-2635 |
www.northstarasset.com
Where creative shareholder engagement
is a positive force for change.TM
Date: November 21, 2022
|
By: |
/s/ Julie N.W. Goodridge |
|
|
Julie N.W. Goodridge |
|
President & CEO* |
|
NorthStar Asset Management, Inc. |
|
|
|
*Julie Goodridge is also the trustee of the NorthStar Asset
Management, Inc Funded Pension Plan, one of the proponents. |
|
This is not a solicitation of authority to vote your proxy. Please
DO NOT send us your proxy card; the Proponent is not able to vote your proxies, nor does this communication contemplate such an event.
The proponent urges shareholders to vote YES on Shareholder Proposal 2 (proxy item #5) following the instruction provided on the management’s
proxy mailing.
The views expressed are those of the authors and NorthStar Asset Management
Inc. as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended
to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information
provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed
that investments in such securities have been or will be profitable. This piece is for informational purposes and should not be construed
as a research report.
This is not a solicitation of authority to vote your proxy.
Please DO NOT send us your proxy card; the Proponent is not able to vote your proxies, nor does this communication contemplate such an
event. The proponent urges shareholders to vote YES on Shareholder Proposal 2 (proxy item #5) following the instruction provided on the
management’s proxy mailing.
PO Box 301840, Boston
MA 02130 | 617-522-2635 |
www.northstarasset.com
Where creative shareholder engagement
is a positive force for change.TM
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