Bill Gates' stake in Microsoft has withered over the last decade as he sold about 80 million shares annually. (Data: Microsoft proxy filings with the SEC.)
More recently, the Wall Street Journal (subscription required) reported on Friday that the delay in appointing a new CEO stemmed from the presence of Gates and Ballmer on the board, and the expectation that they will continue to serve.
The newspaper characterized the issue as one of "awkward board dynamics," including, "A founder who believes he knows best, a CEO who stepped down under pressure for a faster change in strategy, and, soon, an activist investor pushing for big changes."
The latter referred to the expected appointment to the board this month of G. Mason Morfit, president of ValueAct. In late August, Microsoft struck a deal with ValueAct that promised the investment firm a seat on the board in return for pledges to not conduct a proxy fight and not acquire more than 4.95% of the company's stock. Morfit will be the first member not appointed by the board itself.
Analysts have echoed concerns about Gates' presence on the board for months. "Can they really attract a credible candidate knowing that Bill [Gates] may be calling all the shots?" wondered Ben Thompson, an independent analyst who covers technology at his Stratechery website, in November.
Others weren't worried. "A new, confident CEO would know they could get Bill Gates tossed off the board if he meddled too much," argued Patrick Moorhead, principal analyst with Moor Insights & Strategy, last month.
Unlike Gates, Ballmer seems eager to hold onto his Microsoft shares.
"After I retire, I'm just a guy who owns 4% of Microsoft," Ballmer said in September at the company's annual financial analyst conference. "And that's about 65%, 70% of what I've ever owned. I think I've sold five times in my life and I bought once, and I hold on and I treasure my Microsoft stock."
Both Ballmer and Gates were reelected to seats on the board in November, and neither have hinted that they plan to step down.
Perhaps Ballmer hopes to parley his shares into the board's chair. While there is little history to go on -- Ballmer is only the second CEO for the 38-year-old firm, Gates its sole chairman -- Ballmer would be following in Gates' steps, not only as chairman but as the board member with the biggest stake in the company.
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