Microsoft Board to Review Company’s Sexual Harassment and Gender Discrimination Policies

“Our culture remains our number one priority and the entire Board appreciates the critical importance of a safe and inclusive environment for all Microsoft employees,” said Microsoft Chief Executive

Satya Nadella

in a statement announcing the board’s plans. “We’re committed not just to reviewing the report but learning from the assessment so we can continue to improve the experiences of our employees. I embrace this comprehensive review as an opportunity to continue to get better.”

The review will be conducted by law firm Arent Fox LLP, which the board selected because the firm has experience in these matters and hasn’t done a significant amount of work with Microsoft previously, the company said.

Arent Fox is expected to submit its findings to Microsoft senior management and board members with recommendations. The company expects to be able to share a summary of the results of the findings with the public in the spring, the company said.

The law firm’s review is expected to lead to the public release of a Microsoft transparency report detailing the effectiveness of the company’s workplace policies related to sexual harassment and gender discrimination, the company said. It will include data on the number of sexual harassment cases investigated and what the results were. The report is expected to summarize the results of investigations into Mr. Gates as well as other senior leaders, the company said.

The report, “will assess the steps that have been taken to hold employees, including executives, accountable for sexual harassment or gender discrimination,” Microsoft said in a statement about the plans.

Natasha Lamb, a portfolio manager at Arjuna Capital, the firm that submitted the shareholder proposal, said Microsoft’s plans looked like the independent and transparent investigation she had wanted.

“It looks like Microsoft is going to rise to the occasion and do what they need to do,” Ms. Lamb said.

The investor vote in November to force more disclosure from Microsoft was a rare win for activist shareholders. Microsoft had recommended shareholders vote against it and has usually enjoyed strong support from its investors thanks to its strong stock market performance. The company’s stock has jumped nearly 700% since Mr. Nadella was appointed CEO in 2014.

Microsoft shares were down around 4% before the company’s announcement on Thursday. The tech-heavy Nasdaq Composite Index fell 2.5% Thursday.

A Wall Street Journal report, citing people familiar with the matter, last year said Microsoft board members pursued an investigation in 2019 into Mr. Gates’ prior romantic relationship with a female employee. Mr. Gates stepped down from the board in 2020. In the Journal article, a spokeswoman for Mr. Gates said the affair had ended amicably close to 20 years earlier, and that his decision to leave the board wasn’t related to any investigation.

“The Bill Gates controversy was really the canary in the coal mine,” said Ms. Lamb. “That’s what made so many folks question what was happening internally when you see actions that look like they were protecting him. From an outsider’s perspective, having that kind of blemish is not a good thing.”

Microsoft on Thursday said the board’s latest plans go beyond the shareholder proposal by comparing Microsoft’s policies against the best practices on harassment and gender discrimination issues that have been adopted by other companies.

Joseph Grundfest,

a professor at Stanford Law School and an expert on corporate governance, thinks Microsoft’s effort to compare itself against others will create a benchmark for how companies should act.

“Microsoft is going to be collecting these principles and putting them out there,” Mr. Grundfest said. “Other corporations will be under pressure.”

Write to Aaron Tilley at aaron.tilley@wsj.com