Leading Microsoft Investors Ask Bill Gates To Step Down

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Microsoft’s board of directors is under investor pressure to get Bill Gates to step down

Microsoft co-founder Bill Gates is reportedly under pressure from some leading investors to step down from his role as chairman of the software goliath.

The report comes amid a nervous period for Redmond, as it seeks to thrive in the post-PC era and looks for a new CEO to lead its fightback against the tablet and smartphone onslaught.

Investor unrest

On Tuesday, a report suggested that three out of the top 20 investors in Microsoft are lobbying Redmond’s board of directors to press for Bill Gates to step down as chairman, according to Reuters, which cited people familiar with matter.

BILL-GATES-bsodMicrosoft reportedly declined to comment on the report.

The three Microsoft investors are thought to collectively hold more than five percent of the company’s stock, according to Reuters’ own sources. It did not name the disgruntled investors because the discussions were private.

The investors are reportedly concerned that Bill Gates still wields too much power at Microsoft considering his 4.5 percent stake in company (which is still the largest individual stake in Microsoft). This stake and looming presence could limit the power of a new CEO to make substantial changes at the software giant, they feel. Microsoft’s investors are also said to be concerned over Gates’ role on the special committee searching for the successor to Steve Ballmer.

And the investors believe Bill Gates, who spends much of his time on his philanthropic efforts via the Bill & Melinda Gates Foundation, wields power out of proportion to his declining shareholding. Gates sells about 80 million Microsoft shares a year under a pre-set plan. This sell off should leave him with no Microsoft holding by 2018, according to Reuters.

Whilst Microsoft still has a market capitalisation of $279bn (£172bn), it has seen its fortunes decline in recent years in line with the moribund PC market. Microsoft has also struggled against the rising threat posed by the tablet industry. Yet the company does seem to be making some progress in the smartphone arena thanks to its Windows Phone operating system, and more recently its purchase of the mobile handset division of Nokia.

Most of the shareholder pressure so far, said to have originated from activist fund manager ValueAct Capital Management, has been focused on Steve Ballmer, despite Bill Gates admitting in February this year that the company had made some mistakes in its early mobile strategy under his tenure. This marks the first time investors are now seeking for Bill Gates to go as well.

Meanwhile the race is on for Steve Ballmer’s replacement. A TechWeekEurope poll of readers named tech fugitive John McAfee as their favourite to replace Ballmer. More realistic expectations, however, name former Nokia CEO Stephen Elop as a contender.

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