Microsoft investors push for Gates to step down

03 Oct 2013


Three Microsoft investors who between them own 5 per cent of the company are lobbying for founder Bill Gates to step down from his position as chairman.

According to a Reuters report, the unnamed  investors were worried that Gates' influence as chairman was disproportionate to his current 4.5 per cent stake in the company.

The investors also worried that Gates was helping to recruit ousted CEO Steve Ballmer.

According to commentators, there seem to be good grounds for their concerns as, when Gates stepped down from Microsoft he effectively replaced himself with Ray Ozzie, who was born in the same year as Gates and therefore shared the same formative computing experiences with the founder of the firm.

If Ballmer's replacement were to be influenced by similar considerations, investors could feel nervous that Microsoft's senior leadership was too rooted in the past.

The investors seem to be looking for something beyond Steve Ballmer's exit, commentators say.

According to commentators, that was good news for Microsoft, as the primary duty of any public company was to enhance shareholder value and the fact that investors wanted more change at the company suggested they believed current management was not capable of enhancing shareholder value … but that the value was there to be found.

The three investors are concerned that Gates' role as chairman would come in the way of adoption of new strategies and would cramp the new chief executive who would not be able to make substantial changes.

The investors seem to have worries over Gates' role on the special committee searching for Ballmer's successor.

They are also worried that Gates - who spent most of his time on his philanthropic foundation, wielded power out of proportion to his declining shareholding.

Gates held 49 per cent of Microsoft before it went public in 1986, and under a pre-set plan, sells about 80 million Microsoft shares a year, which would leave him with no financial stake in the company by 2018, if the plan continued.

After Ballmer took over as CEO in 2000, Gates lowered his profile, gave up his day-to-day work at the company in 2008, to focus on the $38- billion Bill & Melinda Gates Foundation.

Microsoft was now looking for a new CEO, and though the board was in favour of taking Ballmer's strategy forward with its focus on making devices, such as the Surface tablet and Xbox gaming console, and turning key software into services provided over the internet.


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