"We have a number of significant legal issues that we should resolve before there is any significant change in the company policy," John Connors, chief financial officer, told about 500 stockholders at Tuesday's annual meeting.
The Redmond-based software company paid its second-ever dividend, 16 cents a share, on Friday. Some shareholders had hoped that the payout would increase, since the company has $51.6 billion in cash and short-term investments, but the company's focus on its legal troubles in Europe make that unlikely.
Microsoft faces European critics today for three days of hearings in Brussels following the region's four-year probe into alleged anti-competitive behavior. Brad Smith, senior vice president for law and corporate affairs, said settlement talks with European officials are proceeding.
"We would welcome the opportunity to resolve these things in an amicable way," he said in response to a shareholder question. "We hope in the coming weeks or months we'll be able to work things out with the European Commission."
The company had previously agreed to settle antitrust complaints with the U.S. Justice Department and 18 states, but that deal still faces a challenge by Massachusetts.
Shareholders also expressed concern about Microsoft's efforts to protect its Windows operating system from disabling internet attacks such as the Blaster worm that hobbled hundreds of thousands of computers worldwide in August.
"We feel our progress has been very good, but our customers will tell us whether we're meeting their requirements over the next year or so," chairman Bill Gates said in response to a question about the company's efforts.
Gates told shareholders that the company has doubled research and development spending over the past five years and plans to spend $6.8 billion during this fiscal year.
In response to another shareholder question, chief executive Steve Ballmer also said that research and customer support facilities in China and India will be expanded "to some degree over time."
Also Tuesday, shareholders approved changes in employee compensation that give employees outright shares in the company instead of stock options.
They elected a 10-member board, up from eight previously, and named BMW chief Helmut Panke of Frankfurt, Germany, to become the first Microsoft board member from outside the United States. The other new member will be Charles Noski, former vice chairman and chief financial officer of AT&T.
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