Microsoft Board Opposes Shareholder Proposal for Bitcoin Investment Assessment

TLDR:

• Microsoft shareholders will vote on Bitcoin investment proposal on December 9/10, 2024
• Board recommends voting against the proposal, citing “unnecessary” risks
• National Center for Public Policy Research proposed the Bitcoin assessment
• BlackRock, Microsoft’s second-largest shareholder (5.7% stake), has shown pro-Bitcoin stance
• Microsoft’s board states they already “carefully consider” cryptocurrency investments

Microsoft shareholders prepare to vote on a proposal to assess Bitcoin as a potential investment option for the tech giant. The vote, scheduled for December 9, 2024, comes amid increasing institutional interest in cryptocurrency investments.

The proposal, introduced by the National Center for Public Policy Research, a conservative think tank, suggests that Microsoft should evaluate Bitcoin as a possible hedge against inflation. The group argues that companies should consider investing at least 1% of their total assets in the cryptocurrency.

Microsoft’s board of directors has taken a clear stance against the proposal, recommending that shareholders vote “no” on the assessment. In their SEC filing, the board stated that such an evaluation is “unnecessary” as the company’s management already carefully considers various investment options, including cryptocurrencies.

The company’s Global Treasury and Investment Services team regularly evaluates different assets for diversification purposes. Their assessment process includes considerations for inflation protection and risk management strategies, according to the filing.

Microsoft currently maintains a cautious approach to cryptocurrency, though it already accepts Bitcoin payments for certain online purchases through its Windows and Xbox stores. The company’s leadership emphasizes their existing “strong and appropriate processes” for managing corporate treasury.

The vote takes place against a backdrop of increasing institutional cryptocurrency adoption. BlackRock, Microsoft’s second-largest shareholder with a 5.7% stake, recently purchased $680 million worth of Bitcoin through its iShares Bitcoin ETF.

Microsoft’s shareholder composition could play a crucial role in the vote’s outcome. Vanguard holds the largest stake at 9.1%, followed by BlackRock at 5.7%, and other major institutional investors including State Street, Fidelity, and former CEO Steve Ballmer.

BlackRock’s CEO Larry Fink has recently expressed positive views on Bitcoin, describing it as an independent asset. This stance has led to speculation about how the investment giant might influence the upcoming vote.

The proposal specifically addresses the potential use of Bitcoin as a treasury reserve asset. The National Center for Public Policy Research maintains that Bitcoin represents an “excellent, if not the best, hedge against inflation.”

Current market dynamics show limited corporate adoption of Bitcoin as a treasury asset. MicroStrategy stands as a notable exception, holding 252,220 Bitcoin valued at approximately $17 billion, making it the largest corporate holder of the cryptocurrency.

Microsoft’s board emphasizes that cryptocurrency volatility remains a significant consideration, particularly for corporate treasury applications that require stable and predictable investments to ensure liquidity and operational funding.

The company’s management team has noted that they continue to monitor trends and developments related to cryptocurrencies to inform future decision-making processes. This ongoing evaluation forms part of their standard investment assessment procedures.

The December shareholder meeting will address multiple agenda items, with the Bitcoin investment assessment representing one of several proposals up for consideration. The outcome could influence how other major technology companies approach cryptocurrency investments.

Microsoft has stated in their SEC filing that their opposition to the proposal stems from their belief that the requested public assessment is unwarranted, given their existing investment evaluation processes.

The vote results will be determined by shareholder participation during the December 9 meeting, with major institutional investors likely playing a decisive role in the outcome.