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Shareholders advised to vote against Microsoft director due to 'conflict of interest'

Microsoft shareholders have been recommended by proxy advisory firm Glass Lewis to vote against the re-election of lead independent director John Thompson, due to a conflict of interest.

Thompson is currently in charge of the company's efforts to find a new chief executive officer, as well as being employed as the CEO of cloud-computing firm Virtual Instruments. Virtual Instruments supplies software licences and hardware devices to Microsoft, and it is here that the potential conflict arises.

Last year, Virtual Instruments was paid $2.3 million (£1.4 million) by Microsoft, however Microsoft has stated that these purchases were negotiated "at arm's length."

Despite this assurance from Microsoft, Glass Lewis circulated a note to shareholders on Monday, classifying Thompson as an "affiliated" director as opposed to an independent one.

The advice from Glass Lewis also included recommendations that shareholders vote to re-elect the eight other directors, including co-founder Bill Gates and current CEO Steve Ballmer.

Ballmer plans to retire as CEO in the coming months but shareholders are under no obligation to follow the advice of Glass Lewis. There has previously been some speculation that Bill Gates and Steve Balmer should not even remain as directors when the new CEO comes in, with Gates accused of standing in the way of radical reform at Microsoft.

The next meeting of Microsoft shareholders is scheduled for 19 November.

At the gathering, shareholders will have the option of voting 'for', 'against', or abstaining, with a new director elected if the number of votes 'for' outnumber the number of votes 'against'.

Last week, Microsoft reported record sales of $18.5 billion (£11.4 billion) for its first fiscal quarter.