Microsoft investors target Gates for step-down

Major shareholders lobby board for ejection of company founder

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Microsoft investors target Gates for step-down Bill Gates, founder of what was once the world’s most valuable company, is being targeted by investors who believe his power is not commensurate with his stock holding. (Getty Images)
By  Stephen McBride Published  October 2, 2013

Microsoft Corp chairman Bill Gates, founder of one of the technology industry's most compelling success stories, is being targeted by three of the company's major investors, who want to see him step down from his position, Reuters reported.

Despite the criticism leveled at company CEO Steve Ballmer, who recently announced his intention to resign within the year, this is thought to be the first instance of open hostility towards Gates by shareholders.

According to insiders, the trio is pressuring the board of directors to eject Gates, who founded Microsoft in 1975 with Paul Allen, and built it into the world's most valuable company by 1999, worth an inflation-adjusted $851bn. Today the company is worth $277bn.

At the time of Microsoft's IPO in 1986, Gates owned 49% of the stock but has been systematically selling off shares at the rate of 80m a year as part of a pre-arranged plan. He currently owns 4.5% of Microsoft, a proportion that could dwindle to nothing by 2018 if he continues selling. His detractors are said to own 5% of stock between them and are concerned that Gates' power is disproportionate to his holding.

Gates handed over the chief executive position to Ballmer in 2000, and reduced his role to mere advisor by 2008, when he began focusing on charity work. Ballmer tried to adjust a corporate vision mired in a PC-focused past, building software, devices and services that embraced the emerging categories of mobility and cloud. His lack of success led to pressure for him to step aside, but Microsoft's board has said the company will continue with his strategy. Some investors, however, believe any new CEO should not be bound by Ballmer's vision.

Given Ballmer's departure, some shareholders believe Gates is needed more than ever, while others want to take the opportunity to replace the older generation of tech gurus.

"I've thought that the company has been missing a technology visionary," said Kim Caughey Forrest, senior analyst at Fort Pitt Capital Group. "Bill [Gates] would fit the bill."

"Replacing the old guard with some fresh eyes can provide the oxygen needed to properly evaluate their corporate strategy," said Todd Lowenstein, a portfolio manager at HighMark Capital Management.

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