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Microsoft Board Wants Bill Gates, Steve Ballmer to Stay

By - Source: Reuters | B 23 comments

Microsoft's board of directors will likely re-elect Bill Gates and Steve Ballmer next month despite activist investors.

Despite recent reports that three of Microsoft's top twenty investors want Bill Gates out as Chairman of the board, the company's annual proxy filing made public on Thursday reveals that Microsoft's board of directors still want both Bill Gates and Steve Ballmer to stay. Both have been targets of activist investors who want the two out of the picture and replaced by new leadership that will supposedly better position the company in competing against Apple and Google.

Ballmer revealed his plan to retire within the next 12 months back in August. Until then, he will retain the role of CEO until a successor is appointed, possibly up until August 2014. There has been no indication that Ballmer will remain on the board once he hands over the CEO reigns, but Ballmer previously made it clear to Wall Street analysts that he will remain engaged as a major investor nonetheless.

Thursday's proxy filing reveals that Gates is still the company's largest shareholder, with a 4.5 percent stake. Ballmer follows with a 4 percent stake, but could move into the top position if Gates continues to sell 20 million shares of the company per quarter, which he has done over the last decade. Both Gates and Ballmer are expected to be re-elected by shareholders at the annual meeting on November 19.

Reuters reports that the proxy filing made no mention of Mason Morfit, president of activist shareholder ValueAct Capital Management. Morfit was offered a board seat by Microsoft in August, and sources claim that he will take up the offer and likely be appointed to the board after Microsoft's annual shareholder meeting.

Earlier this week, sources said three top Microsoft investors wanted Bill Gates out, fearing that he could block the adoption of new strategies, and limit the new CEO's power to make substantial changes. They're also reportedly worried about Gates' role on the special committee for seeking out a new CEO, and the amount of power he still wields given his declining share amount. They also point to his philanthropic foundation that consumes most of his time.

Gates owned 49 percent of Microsoft before it went public in 1986, and is now selling about 80 million Microsoft shares a year under a preset plan. By 2018, he is expected to have no financial stake in the company.

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  • -7 Hide
    coreym72 , October 7, 2013 6:09 AM
    Investing is a gamble but for investors to want change the direction of a company is a shame. You give a company money in the first place because you trust them. If you don't then don't bitch when you lose it all. I almost feel sorry for Apple because Icahn but then again I care less about a gadget company.
  • -2 Hide
    tanjali , October 7, 2013 6:29 AM
    I don't understand "selling about 80 million Microsoft shares a year under a preset plan".? It sounds like extortion for me. Why would somebody give away shares of strong company? If he has money enough for his family and grand grand children for that matter.
  • 1 Hide
    back_by_demand , October 7, 2013 7:51 AM
    3 activist investors shown up for what they are, troublemakers - Bill and Steve are responsible for all of Microsoft's success and failures, but the failures are vastly outnumbered, a bit like their lame duck board votes
  • 4 Hide
    vmem , October 7, 2013 8:19 AM
    Quote:
    Investing is a gamble but for investors to want change the direction of a company is a shame. You give a company money in the first place because you trust them. If you don't then don't bitch when you lose it all. I almost feel sorry for Apple because Icahn but then again I care less about a gadget company.


    Your statement is only true for us 'average joe' investors. when you become a major investor, especially one of these 'top three largest investors', you're not gambling, you're essentially buying a major chunk of the company. and as with anything else you buy with money, you deserve a say in what happens to it.

    take a look at the housing rental market for instance, you can invest in the construction of a new apartment building. and you'll probably end up with something like 25 out of 100 apartments if you invested around 25% (let's just ignore all the complications). now you still need to consult with the management and other owners etc etc, but you have a strong say in what happens to your 25%, and by extension a strong influence in the remaining 75%.

    this is essentially what's happening to our government as well, but I won't go there lol
  • -3 Hide
    1991ATServerTower , October 7, 2013 8:54 AM
    If Balmer is the #2 investor at 4% of the company, than no else owns more than 3.99% of it. So what's "major investor", 2%? Why should the other 98% of the people give a damn what the 2% person thinks? Is he going to take his ball and go home? So what, lots of others out there to take his place.

    Gates and Balmer matter not because of their money, but because of their proven track record of leadership. Money and a mouth can't buy that.
  • 7 Hide
    JD88 , October 7, 2013 9:01 AM
    Microsoft's market growth has been flat for nearly a decade during a time where competitors have flourished.

    Successes are greater than failures, but those successes have been few and far between over the last 5-6 years. Time for some new blood. Steve should go away completely. Bill should stay on as a board member but not chairman.
  • -1 Hide
    milktea , October 7, 2013 9:45 AM
    Quote:
    If Balmer is the #2 investor at 4% of the company, than no else owns more than 3.99% of it. So what's "major investor", 2%? Why should the other 98% of the people give a damn what the 2% person thinks?


    The top three investors might add up to about 6%. That's not insignificant.
  • 3 Hide
    smeezekitty , October 7, 2013 10:39 AM
    Personally I'd like Ballmer to go but Bill Gates to stay.
  • 3 Hide
    vmem , October 7, 2013 11:08 AM
    Quote:
    If Balmer is the #2 investor at 4% of the company, than no else owns more than 3.99% of it. So what's "major investor", 2%? Why should the other 98% of the people give a damn what the 2% person thinks? Is he going to take his ball and go home? So what, lots of others out there to take his place.

    Gates and Balmer matter not because of their money, but because of their proven track record of leadership. Money and a mouth can't buy that.


    When the remaining 98% can't form a consensus opinion, yes, the guy with 2% has a say in what happens. If however, people who own 5-10% of the remaining shares got together and submitted a letter to the board asking for changes, they'll be heard and their voice will be louder than the 2% guy. it's just how investment works...

    Personally, I'm of a similar opinion as many others, Bill should stay, but not as chairman, and Ballmer should leave completely. Microsoft has only had a few successes during Ballmer's time, and their overall growth has flatlined
  • 1 Hide
    vpoko , October 7, 2013 11:14 AM
    Tanjali, he's selling his stocks willingly, it's not extortion: he wants to divest himself of his MS stock. The reason he's doing it under a timed plan is not to sink the share prices by flooding the market all at once.
  • -1 Hide
    sykozis , October 7, 2013 11:16 AM
    Quote:
    Quote:
    If Balmer is the #2 investor at 4% of the company, than no else owns more than 3.99% of it. So what's "major investor", 2%? Why should the other 98% of the people give a damn what the 2% person thinks?


    The top three investors might add up to about 6%. That's not insignificant.


    The top 2 investors in Microsoft add up to 8.5%...and that's Gates and Ballmer...
  • 1 Hide
    festerovic , October 7, 2013 11:17 AM
    Microsoft newbs are having a hard time in the big world and want daddy(s) to stay home and take care of them. Apple is in the same boat! Congress too! Flush the toilet, everyone. Old thinking = old products.
  • -1 Hide
    back_by_demand , October 7, 2013 11:36 AM
    How many shares you have is irrelevant, 20 board members with a vote each is 5% of votes regardless of your stock portfolio
  • -1 Hide
    DRosencraft , October 7, 2013 12:06 PM
    I think what some here have issue with is the idea that singular individuals, by means of simply grabbing up stock, will come in and start telling a company how to work betrays the starting idea of a belief in the direction and management of the company.

    That being said, they are board members who get to decide on hiring and by extension the company's direction. It's the risk you open your company up to when you make it public.
  • -1 Hide
    TeraMedia , October 7, 2013 1:06 PM
    @vpoko and tanjali:

    That might be half-right. Since Gates is on the BoD, he may have access to material non-public information. If he were to sell on the market w/out a plan, he might quickly find himself in the same boat as Martha Stewart, getting nailed for insider sales. By stating that he intends to make a sale several months (or even years) in the future, it eliminates the material and/or non-public nature of whatever information he holds at the time he creates the plan, so that it is no longer considered an insider sale.
  • -1 Hide
    back_by_demand , October 7, 2013 3:42 PM
    TeraMedia, also he really doesn't need the money, once you get past $50 billion I'm sure he doesn't even think about it. His 2 main focuses will be "Which 3rd world country should I eradicate Polio from next" and "I really want that company I started 30 years ago to do well"
  • 2 Hide
    littleleo , October 7, 2013 5:16 PM
    The culture at Microsoft has to change and until it does we will continue to get failure after failure. The whole mindset that was in charge of Windows 8, Office 2013, and Office 365 needs to be replaced with intelligent design thinking.
  • 1 Hide
    ta152h , October 7, 2013 6:30 PM
    Microsoft is a dying company, so naturally Ballmer will leave like rat from a sinking ship.

    Gates was never particularly competent, but since he had a monopoly, he could leverage it. His technical ability and foresight was nil. He just copied what others invented, used monopoly power to squash them, and reaped the harvest of their fruit. What did he invent? What did Microsoft invent? GUI? No. DOS? Nope. Spreadsheet? No. Word processing software? No. Database software? No. Browser? No. Tablet? Well, no. Any other dandy technologies that changed our lives? Hmmm, no. Kind of strange from a company that's been the largest software company in the world.

    It's a parasitic company. A bane to computing. Gates has stifled competition, Ballmer has helped it by being so incompetent. Now, they bow to Apple, and try to copy their success, like the did with the GUI. It worked then, it's not working now. Apple could buy and sell Microsoft, but why would they want to? It's ironic.

    Microsoft created no industries. Nor meaningful technologies. Now that they are dying, and they are dying, their board sees too late they've missed the boat.

    The future belongs to the free OS, not the $100 one. Apple will remain as a niche, even though they suck and are overpriced, because it's just chic to have an Apple, God alone knows why. Microsoft will die first in the consumer field, and then slowly in business, but very slowly. They'll continue to suck life and productivity out of the business world, with their slow, bloated, counter-intuitive and expensive software.

    But, it's a dead company. ChromeOS, Android, Linux or another free OS that we don't know about will own the future. PCs are commodities, and an expensive OS just doesn't fit in anymore, with other choices finally being viable.
  • -1 Hide
    FloKid , October 7, 2013 9:02 PM
    Bill, Gates, and Balmer got the company this far maybe it will be really good later who knows. I like Windoz, scared to try Linux, Apple is a nono : )
  • 0 Hide
    smeezekitty , October 7, 2013 9:50 PM
    Quote:
    scared to try Linux


    No need to be scared. The biggest problem is relatively limited software support.
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