According to Reuters, three of Microsoft’s largest institutional shareholders want Bill Gates to step down as chairman. The story says, “The three investors are concerned that Gates’ presence on the board effectively blocks the adoption of new strategies and would limit the power of a new chief executive to make substantial changes. In particular, they point to Gates’ role on the special committee searching for Ballmer’s successor.”
One can make the case against Gates by saying the author of The Road Ahead missed the on-ramps to search, smart phones and tablets. Whatever the alleged sins of CEO Steve Ballmer — stack ranking, excessive and toxic bureaucracy — were countenanced by Chairman BillG. On the other hand, Gates is the co-founder and first chief executive of the company, and one of the most respected technology leaders in history. He remains widely beloved in the company and a connection with its old glory. He is the largest individual shareholder. Also, having a separate chairman and chief executive officer generally makes for more healthy corporate governance.
But if that last assertion is so, why has Microsoft’s stock price stagnated? This cuts to the heart of the effort — or trial balloon — to move Gates aside and presumably bring in an imperial chairman-chief executive.
In some ways, Microsoft operates on an older corporate model, marked by such characteristics as the need to satisfy many goods and stakeholders, and where the company’s health was aligned with that of its key locations. Thus, Microsoft has 42,000 employees in the Puget Sound region and it’s difficult to go to a civic event that doesn’t have Microsoft as a partner, sponsor or participant. This is the way most of corporate America operated until around 1980. Microsoft has had notable successes along with blunders and continues to make huge sums of money. To be sure, Microsoft is a modern corporate giant, with everything from a global presence to efforts at (perfectly legal) tax avoidance. But there’s something bracingly old-school about it, too.
That’s what these dissident institutions hate. Most major companies have only one goal: Maximize short-term profits to raise the stock price. You can bet this would be served by dramatic reductions in employment in the Seattle area, moving more jobs offshore, selling and spinning off units for a quick gain and to momentarily bedazzle the Wall Street Boyz. For more than 30 years, this looting mentality has become orthodoxy in corporate America, with staggering collateral damage to communities, jobs, wages, competitiveness and innovation.
Microsoft needs to return to its roots of innovation and hyper-competitiveness. If anything, this argues for more BillG. And I know many of you want St. Alan Mulally to come back home as corporate savior, and maybe that could help, maybe not. Either way, the institutions grumbling against Gates do not have Microsoft’s best interests anywhere on their to-do list. Instead, it is a rich target, ripe for the pickin’.
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Today’s Econ Haiku:
The shutdown, priced in
But now investors can see
Default’s cost, priceless