Sandra Peterson

About Sandra E. Peterson

Sandra E. Peterson, age 66, is Microsoft’s Lead Independent Director (since March 2023) and has served on the Board since 2015. She is independent and an Operating Partner at Clayton, Dubilier & Rice, LLC; her prior operating roles include Group Worldwide Chair at Johnson & Johnson, CEO of Bayer CropScience, senior leadership at Bayer HealthCare, and Medco Health Solutions. Birthplace: United States. Microsoft committees: Compensation (member) and Governance & Nominating (Chair) .

Past Roles

External Roles

Board Governance

• Current committee assignments: Compensation Committee (member) and Governance & Nominating Committee (Chair); she is also the Board’s Lead Independent Director .
• Lead Independent Director responsibilities include chairing executive sessions, leading the CEO evaluation, coordinating CEO succession oversight, approving Board agendas/schedules, chairing the annual meeting, and representing the Board with shareholders, with authority to retain advisors .
• Independence: the Board determined Peterson meets Microsoft’s independence standards and Nasdaq listing rules; 11 of 12 nominees are independent .
• Attendance and engagement: each director nominee attended at least 75% of meetings, and together nominees attended at least 90% of combined Board/committee meetings; Board met 6 times, committees held 27 meetings in FY25. Directors are expected to attend the annual meeting; all directors attended in 2024 .
• Shareholder engagement: the Lead Independent Director (Peterson) and Compensation Committee chair consult with large institutional investors; Microsoft engaged on ESG topics with shareholders representing ~50% of shares in FY25 .

Fixed Compensation

• Microsoft non-employee director compensation structure (FY2025):
  • Through Dec 9, 2024: Annual base retainer $360,000 (cash $125,000; stock $235,000); LID retainer stock $40,000; chair retainers: Audit $45,000, Compensation $35,000, ESPP $25,000, Governance & Nominating $25,000; Audit non-chair member $15,000 .
  • From Dec 10, 2024: Annual base retainer $375,000 (cash $125,000; stock $250,000); LID retainer stock $60,000; other chair/member retainers unchanged .

Notes:

• Peterson’s quarterly stock award fair values as LID: $75,000 for the first two quarters and $83,750 for the final two quarters (aggregate $317,500) .
• She elected to defer her cash and stock compensation, converting into 1,023 shares of Microsoft common stock; Microsoft matches director charitable gifts up to $15,000 per calendar year .

Performance Compensation

• Not applicable for non-employee directors. Microsoft’s director pay is a mix of cash retainer and time-based equity retainer; no performance metrics or options are disclosed for director compensation .

Other Directorships & Interlocks

Expertise & Qualifications

• Extensive CEO/Chair-level operating experience across healthcare and life sciences (Johnson & Johnson; Bayer), and managed care (Medco/Merck-Medco), plus private equity operator role at CD&R, supporting governance depth and strategic oversight .
• Lead Independent Director responsibilities indicate strong governance leadership and shareholder engagement .

Equity Ownership

• Beneficial ownership as of Sept 30, 2025: 30,682 shares; percent of common stock: less than 1% .
• Deferred Compensation Plan: Peterson’s common stock figure includes 25,282 shares credited under the Non-Employee Directors Deferred Compensation Plan that may be distributable within 60 days of Sept 30, 2025 .
• Ownership policy: Directors must own Microsoft shares equal to at least 3x the base annual retainer and retain 50% of net shares until compliance; all directors complied in FY25 .
• Hedging/pledging: strict prohibitions on hedging, margin purchases, or pledging Microsoft stock for directors/executives .

Governance Assessment

• Strengths:

  • Lead Independent Director with robust, defined authorities (CEO evaluation, agenda control, succession planning oversight, advisor retention), enhancing independent oversight and investor confidence .
  • Independent status affirmed under Microsoft’s guidelines and Nasdaq rules; Board maintains majority independence (11 of 12 nominees) .
  • Strong director attendance (≥75% for each nominee; ~90% combined), with regular executive sessions; consistent annual meeting attendance .
  • Shareholder engagement embedded in governance; LID and Comp chair consult with major institutions; ~50% of shares engaged on ESG topics in FY25 .
  • Director ownership and hedging/pledging restrictions align interests and mitigate risk; compliance with ownership policy .

• Compensation and committee oversight:

  • Director pay is primarily equity; LID retainer increased (to reflect expanded responsibilities), signaling commitment to independent leadership .
  • Compensation Committee uses an independent consultant (Pay Governance LLC) with adopted independence standards; no unrelated services to Microsoft beyond committee advisory .

• Conflicts/related-party:

  • Audit Committee policy requires approval of related-party transactions >$120,000; in FY25, ordinary-course dealings existed with entities associated with directors, but none required Audit Committee approval, reducing conflict risk .
  • Strict hedging/pledging bans reduce alignment concerns; no pledging allowed .

• Shareholder signals:

  • Say-on-pay approval at the 2024 annual meeting exceeded 91%, indicating broad investor support for Microsoft’s compensation governance framework .

• Red flags:

  • None disclosed for Peterson: no attendance shortfall, no related-party transactions requiring approval, no pledging/hedging, and no current external public company boards that could create interlocks with key Microsoft counterparties .

Overall, Peterson’s role as Lead Independent Director, Governance & Nominating Chair, and Compensation Committee member—combined with strong independence, attendance, and shareholder engagement—supports effective board oversight and investor confidence .