Steve Ballmer Steps Down From Microsoft Board

9 years, 7 months ago - August 20, 2014
Steve Ballmer Steps Down From Microsoft Board
Former Microsoft Chief Executive Steve Ballmer quit his post as a company director after 14 years, giving new CEO Satya Nadella an even freer hand to reshape the company.

Mr. Ballmer, fresh off his $2 billion purchase of the Los Angeles Clippers basketball franchise, indicated that his duties as team owner, among other interests, wouldn't leave enough time to stay on Microsoft's board.

"I think it would be impractical for me to continue to serve on the board, and it is best for me to move off," Mr. Ballmer said in a public letter to Mr. Nadella, who became CEO in February. "I see a combination of the Clippers, civic contribution, teaching and study taking a lot of time."

Mr. Ballmer's move completes a dramatic handover of power at Microsoft. His board departure, following Bill Gates's February decision to step down as the company's chairman, leaves the two people most responsible for building Microsoft with diminished roles in the company's future.

"It's the end of an era," said Daniel Ives, an analyst covering Microsoft with FBR Capital Markets. He said Mr. Ballmer remained the "elephant" in Microsoft's boardroom, and his departure fully gives Mr. Nadella a fresh start. "Any sort of overhang of Ballmer being on the board is now in the rear view mirror," Mr. Ives said.

Mr. Ballmer's departure continues the remaking of Microsoft's board.

John Thompson, a longtime technology executive who led the search for Mr. Ballmer's successor as CEO, took over as board chairman when Mr. Gates relinquished that role.

Microsoft also this year added a board seat for a representative of shareholder ValueAct Capital Management LP, the first time the company had appointed a director not solely at its discretion.

Since he took over as CEO in February, Mr. Nadella has been remaking a company largely shaped by Messrs. Ballmer and Gates, the only other CEOs in Microsoft's nearly four-decade history.

Mr. Nadella's decision last month to cut up to 18,000 employees in the next year, or about 14% of Microsoft's workforce, highlighted his new tack. He spared few sacred cows; the job cuts included a shake-up at the Windows division, which under Mr. Ballmer typically received special treatment and extra resources.

Mr. Nadella also has emphasized businesses, such as Microsoft's cloud-computing offerings, that weren't a central focus under Mr. Ballmer.

It has been unclear since Mr. Ballmer stepped down as Microsoft's CEO how long he would stay on as a director.

When the company was searching for a new CEO to succeed Mr. Ballmer, beginning last summer, some potential candidates worried that Messrs. Gates and Ballmer might second-guess the new CEO's strategy if the pair remained on the board.

"The dynamics of the board are awkward for him to stay," Nomura Securities analyst Rick Sherlund said Tuesday.

Mr. Ballmer's term on the board was slated to expire in late fall, and he volunteered this month to leave early, a person close to the situation said. This person also said it was "reasonable to speculate" that Microsoft directors wouldn't have nominated Mr. Ballmer for another one-year board term.

In his resignation letter, Mr. Ballmer indicated that he wouldn't completely cut himself off from his former company. "Count on me to keep ideas and inputs flowing," Mr. Ballmer wrote. "I bleed Microsoft—I have for 34 years and I always will."

Mr. Ballmer also has a significant financial stake in Microsoft's future.

This spring, Mr. Ballmer surpassed Mr. Gates, as the largest individual shareholder in Microsoft.

Mr. Ballmer's current holdings amount to about 4% of Microsoft's total shares, valued at $15.1 billion at Tuesday's U.S. market close.

Giving up his CEO post also plumped Mr. Ballmer's wallet. Microsoft's stock price has climbed 39% since Mr. Ballmer announced a year ago his plans to retire as CEO.

The stock bump boosted the value of Mr. Ballmer's stock holdings by more than $4 billion—or two times what he paid for the Clippers.

 

Text by Wall Street Journal

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