Microsoft Shareholders Reject Proposal to Add Bitcoin to Corporate Balance Sheet

Microsoft shareholders have voted against a resolution to diversify the company’s balance sheet by adding Bitcoin (BTC) as a corporate asset. The proposal, put forward by the National Center for Public Policy Research (NCPPR), was discussed during Microsoft’s annual shareholder meeting on December 10, but ultimately failed to gain traction.

The Proposal and Its Rationale

The NCPPR, a pro-free-market think tank based in Washington, D.C., advocated for Microsoft to embrace Bitcoin as a way to enhance shareholder value by diversifying profits. In a pre-recorded video presented during the meeting, the NCPPR argued that Bitcoin represented a technological wave the company could not afford to miss. The video, which opened with the statement, "Microsoft can’t afford to miss the next technology wave, and Bitcoin is that wave," highlighted the potential value of Bitcoin and its increasing acceptance among institutional investors.

The group emphasized the growing trend of Bitcoin adoption by corporations, citing examples like MicroStrategy and BlackRock, with BlackRock offering a Bitcoin ETF to its clients. The proposal suggested that incorporating Bitcoin into Microsoft's balance sheet could generate trillions in value and reduce risks for shareholders.

While acknowledging Bitcoin’s volatility, the NCPPR recommended that Microsoft invest between 1% and 5% of its profits in Bitcoin. The group suggested that the company conduct an assessment to determine if such diversification would align with its long-term shareholder interests.

Microsoft Board’s Opposition

In response to the proposal, Microsoft’s board of directors filed a recommendation against it, calling it "unnecessary" and stressing that the company had already carefully considered the issue. In a 14A filing with the U.S. Securities and Exchange Commission (SEC), the board argued that Bitcoin’s volatility made it unsuitable for corporate treasury operations, which require stable and predictable investments to ensure liquidity and operational funding.

"As the proposal itself notes, volatility is a factor to consider in evaluating cryptocurrency investments," the board stated. "Microsoft has strong and appropriate processes in place to manage and diversify its corporate treasury for the long-term benefit of shareholders."

The board also pointed out that while MicroStrategy's and BlackRock’s approaches to Bitcoin adoption had similarities to Microsoft's operations, the two companies' differing strategies in managing their balance sheets made such comparisons inadequate. The board’s rejection was based on its belief that Microsoft was already managing its corporate treasury appropriately and did not need to take the additional step of incorporating Bitcoin.

The Influence of Bitcoin Advocates

The proposal was partly inspired by the persuasive pitch made by Bitcoin proponent Michael Saylor, the chairman of MicroStrategy, who addressed Microsoft's board on December 1. Saylor argued that Bitcoin could substantially boost Microsoft's market capitalization, claiming the company could add nearly $5 trillion in value by converting its cash flows, dividend payouts, debt, and stock buybacks into Bitcoin.

Despite this appeal, the board remained unswayed by Saylor’s arguments. "Microsoft has strong and appropriate processes in place to manage and diversify its corporate treasury for the long-term benefit of shareholders," the board emphasized in its filing, reinforcing its stance against adopting Bitcoin at this time.

The Vote and Future Proposals

Following the shareholder meeting, preliminary results confirmed that the majority of Microsoft shareholders sided with the board’s recommendation, voting against the proposal to add Bitcoin to the company’s balance sheet. This decision highlights the caution many investors and corporate leaders continue to exercise when it comes to integrating volatile assets like Bitcoin into corporate finances.

The NCPPR, however, is not giving up on its campaign. The think tank submitted a similar proposal to Amazon’s shareholders on December 8, urging the company to consider Bitcoin as a hedge against inflation. This proposal will be considered at Amazon’s shareholder meeting in April 2025. In that pitch, the NCPPR highlighted the Consumer Price Index (CPI) inflation rate of 4.95%, arguing that Bitcoin could protect Amazon’s $88 billion in cash and short-term equivalents from eroding due to inflation.

Conclusion

While Bitcoin advocates continue to push for broader corporate adoption of the cryptocurrency, Microsoft’s rejection of the proposal illustrates the company’s cautious approach to integrating Bitcoin into its financial strategy. The decision reflects broader hesitance within corporate America to embrace Bitcoin fully, despite its growing institutional acceptance. As the debate continues, companies like Amazon may face similar proposals in the near future, but it remains to be seen whether they will follow Microsoft’s example or take a different path.