Microsoft Board Wants Bill Gates, Steve Ballmer to Stay

By Kevin Parrish
published

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.

Kevin Parrish
23 Comments Comment from the forums
  • coreym72
    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.
    Reply
  • tanjali
    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.
    Reply
  • back_by_demand
    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
    Reply
  • vmem
    11671265 said:
    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
    Reply
  • 1991ATServerTower
    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.
    Reply
  • JD88
    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.
    Reply
  • milktea
    11672134 said:
    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.
    Reply
  • smeezekitty
    Personally I'd like Ballmer to go but Bill Gates to stay.
    Reply
  • vmem
    11672134 said:
    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
    Reply
  • vpoko
    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.
    Reply