Microsoft Board Motivated to Hire New CEO Before Activist Joins in Early 2014
Microsoft's board of directors wants to wrap up its search for a new CEO before the end of the year, Bloomberg said Wednesday, citing anonymous sources close to the action.
Thu, October 10, 2013
Computerworld — Microsoft's board of directors wants to wrap up its search for a new CEO before the end of the year, Bloomberg said Wednesday, citing anonymous sources close to the action.
According to Bloomberg, the board's CEO search committee -- which includes co-founder and chairman Bill Gates and is led by John Thompson, a former Symantec CEO -- has already interviewed several candidates, been rebuffed by at least one, and is narrowing its choices.
The board hopes to have a Ballmer replacement before year's end.
While financial analysts have urged Microsoft to quickly pick a successor for Ballmer, if only to shorten the period of uncertainty about the new leader's direction, there is another reason for putting someone in place before the start of 2014.
In late August, Microsoft announced that it had reached agreement with ValueAct Capital, an activist shareholder that had been pressing for changes at Microsoft since earlier in the year.
Under the terms of the deal, Microsoft has given ValueAct president, G. Mason Morfit, the option to join the company's board of directors in early 2014, as well as said he could regularly meet with "selected Microsoft directors and management to discuss a range of significant business issues," according to a Microsoft statement at the time the agreement was made public.
In return for the board seat and other considerations, ValueAct has promised not to acquire more than 4.9% of Microsoft's outstanding shares, not to conduct any proxy fight, and not to "make any statement or announcement that constitutes an ad hominem attack on, or otherwise disparages or causes to be disparaged the Company or its affiliates or any of its current or former officers or directors," Microsoft's filing with the U.S. Securities and Exchange Commission (SEC) read.
If Morfit joins the board, he would be the first Microsoft director ever appointed under duress. As of July, ValueAct owned less than 1% of Microsoft.
But ValueAct's CEO, Jeffrey Ubben, who announced a $2 billion stake in Microsoft in April, had been agitating for a seat on the company's board. Ubben has also been linked to calls for Ballmer's ouster, and to general discontent among some shareholders that Microsoft was hoarding too much cash. Like many shareholders, ValueAct has reportedly expressed concern over several major mistakes by Microsoft, including falling behind in smartphones and tablets. At an investor conference, Ubben also called on Microsoft to make its lucrative Office software franchise more widely available on non-Windows platforms.