Hugh Johnston
MICROSOFTAbout Hugh F. Johnston
Independent director at Microsoft since 2017; age 64. Currently Senior Executive Vice President and Chief Financial Officer at The Walt Disney Company; previously Vice Chairman and CFO at PepsiCo and VP at Merck-Medco. Audit Committee Chair at Microsoft and designated “Financial Expert.” Other public board: HCA Healthcare, Inc.
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| The Walt Disney Company | Senior Executive Vice President & CFO | 2023–present | Financial leadership in large-scale media & entertainment |
| PepsiCo, Inc. | Vice Chairman; EVP & CFO; EVP Global Operations; President Pepsi-Cola North America; various roles | 1987–1999; 2002–2023 | Global operations, finance, and P&L leadership |
| Merck & Co., Inc. (Merck-Medco) | Vice President, Retail Marketing | 1999–2002 | Healthcare and managed care marketing |
External Roles
| Organization | Role | Tenure | Committee Positions |
|---|---|---|---|
| HCA Healthcare, Inc. | Director | Current | Not disclosed in MSFT proxy |
Board Governance
- Committee assignments: Audit Committee Chair; designated Audit Committee “Financial Expert.” No membership on Compensation, Environmental/Social/Public Policy (ESPP), or Governance & Nominating Committees .
- Attendance and engagement: Board met 6 times in FY2025; total Board and committee meetings 27. Each director nominee attended at least 75% of applicable meetings, with combined attendance at least 90%; all directors attended the 2024 Annual Meeting .
- Independence: Board determined Johnston is independent under Microsoft’s guidelines and Nasdaq standards. Independence assessment considered ordinary-course transactions (e.g., software licenses) with entities where directors are officers; none required Audit Committee approval .
- Committee activity level: Audit Committee held 8 meetings in FY2025 .
Fixed Compensation
| Component | Amount ($) | Notes |
|---|---|---|
| Fees Earned or Paid in Cash | 170,000 | Includes base retainer and Audit Chair retainer |
| Stock Awards (grant-date fair value) | 242,500 | Quarterly director stock awards |
| All Other Compensation | 0 | No matching gifts recorded for Johnston in FY2025 |
| Total FY2025 Director Compensation | 412,500 |
Program structure (context):
- Annual base retainer increased from $360,000 (through Dec 9, 2024) to $375,000 (from Dec 10, 2024), paid $125,000 cash + $250,000 stock; Audit Committee Chair $45,000 cash; Audit Committee member $15,000 cash .
Performance Compensation
| Element | Disclosed? | Detail |
|---|---|---|
| Performance-based director pay metrics | No | Microsoft director pay comprises cash retainers and stock awards; no performance metrics disclosed for directors |
Microsoft emphasizes pay-for-performance for executives; director compensation is primarily fixed retainers delivered mostly in equity to align directors with shareholders .
Other Directorships & Interlocks
- Public boards: HCA Healthcare (current) .
- Executive role elsewhere: CFO at Disney (current) .
- Independence safeguards: Microsoft’s independence determination explicitly considers ordinary-course dealings with companies where directors are officers; none rose to related-party transactions requiring Audit Committee approval in FY2025 .
- Board service guidelines: Microsoft’s policy generally limits directors to no more than three other public company boards; CEOs limited to one other board (Johnston is CFO) .
Expertise & Qualifications
- Financial expertise: Designated Audit Committee “Financial Expert”; extensive CFO experience at Disney and PepsiCo .
- Global business and leadership: Senior roles across consumer goods and healthcare distribution; oversight of complex, regulated industries .
- Governance: Chairs Microsoft’s Audit Committee overseeing financial reporting, risk, internal audit, and external auditor relationship .
Equity Ownership
| Measure | Amount | Notes |
|---|---|---|
| Common Stock Beneficially Owned | 8,032 | Excludes 68 shares held by a family trust (disclaimed) |
| Additional Underlying Shares/Stock Units | 1,130 | Deferred units not payable within 60 days |
| Total (beneficial + additional underlying) | 9,162 | |
| Deferred Compensation Conversion | 953 shares | Johnston elected to defer cash and stock retainers; converted into 953 shares |
Alignment policies:
- Director stock ownership requirement: At least 3x base annual retainer; each director complied in FY2025 .
- Hedging/pledging: Directors prohibited from hedging, using derivatives, purchasing on margin, or pledging Microsoft stock .
Governance Assessment
- Board effectiveness: Strong independence (11 of 12 nominees); rigorous evaluation process; executive sessions each quarterly meeting; robust risk oversight framework with active Audit Committee leadership by Johnston .
- Audit oversight quality: Committee met 8 times; oversees financial reporting, ICFR, enterprise risk, business continuity; recommends Deloitte as auditor with emphasis on independence and audit quality .
- Compensation alignment: Director pay weighted to equity; Johnston defers retainers into stock, increasing alignment with shareholders .
- Conflicts and red flags:
- Related-party exposure: None requiring Audit Committee approval in FY2025; independence affirmed despite ordinary-course transactions with companies where directors serve .
- Stock risk behaviors: Hedging/pledging prohibited; directors meet ownership guidelines .
- Attendance: Meets and exceeds thresholds; strong engagement metrics .
Overall signal: As Audit Committee Chair and financial expert, Johnston contributes materially to financial oversight and risk management, with compensation and ownership that align with shareholder interests and no disclosed related-party or attendance red flags .