Tag Archives: Steve Ballmer

Microsoft

Microsoft’s long, messy, occasionally clumsy CEO search is about to end

Microsoft could name a new CEO within the next week, after making it clear that whoever gets the job at this point was a back-up choice.

Microsoft could be ready to announce a new CEO within the next week, and it looks to be an insider, after the lengthy outsider search failed to produce results.

Re/Code and Bloomberg both report that Satya Nadella, the head of the server and tools division and 22-year Microsoft, is now the leading choice, although Tony Bates and Stephen Elop remain in the running.

Whoever among this group ends up getting picked will be a second choice. Microsoft’s board chased a lot of outside people, and to pick Nadella or the others suggests the board gave up and just went with the inside guy.

Consider: first it was Allen Mulally of Ford and John Lawrie of CSC. Lawrie faded fast but Mulally hung in there for months before bowing out. Then came word that the job would go to former VMware CEO and ex-Microsoft exec Paul Maritz, who turned it down immediately. Then there was talk of Steve Mollenkopf, COO of Qualcomm, who ended up being promoted to CEO. Finally, there was Ericsson CEO Hans Vestberg, who also shot them down.

How would YOU feel to be the sixth choice for anything?
There is still the chance for an outsider. Re/Code boss Kara Swisher is still rooting for current VMware CEO Pat Gelsinger, who would be a great choice, but there have been no hints about him in any direction.

Swisher says this protracted search is making a mess inside Microsoft. It’s disrupting the reorg announced prior to Ballmer’s announcement and has left the company in a state of uncertainty. On the one hand, you want the Microsoft board to make the right decision, but on the other hand, they can’t drag this on much longer.

Both Re/Code and Bloomberg report that Steve Ballmer will step down from the board, a wise decision, but there are conflicting stories between the two over Bill Gates. The founder and 800-pound gorilla is either going to become more involved or leave as Chairman. John Thompson would replace him.

Nadella would be wise to demand this. He needs those two out of the way to do what he must and should demand it as a condition of his acceptance.

 

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Tech

Ballmer’s last decisions at Microsoft prove to be his best

Ballmer’s last decisions at Microsoft prove to be his best
Departing CEO Steve Ballmer knew needed to change Microsoft, but couldn’t change himself. So he fell on his own sword.

An amazing article in Monday’s edition of the Wall Street Journal gives insight into what happened to precipitate Steve Ballmer’s departure from Microsoft. As many have speculated, Ballmer is not leaving because he’s ready. But what is interesting is the process that led to his departure.

The Journal’s article is built on interviews with Ballmer and Microsoft board members, not a bunch of anonymous sources. The story begins in January 2013, with Ballmer on a conference call with the board, who were pushing him hard to make changes far faster than he had been prepared to make.

“Hey, dude, let’s get on with it,” lead director John Thompson says he told him. “We’re in suspended animation.”

(Seriously? These are adults talking to each other like that?)

RELATED: Microsoft employee on stack ranking and the company’s ‘most universally hated exec’

They were getting impatient with Microsoft’s repeated missing the boat on things like smartphones and tablets, not to mention Windows 8 stinking up the market. Ballmer had a vision but it was taking too long. The directors didn’t push Steve to step down “but we were pushing him damn hard to go faster,” Thompson told the WSJ.

Thompson isn’t a lightweight. He was a former IBM senior executive and was the long-running CEO of Symantec before retiring several years ago. He is now heading up the CEO search committee. So he’s someone who could speak honestly and bluntly to Ballmer.

Ballmer said “I’ll remake my whole playbook. I’ll remake my whole brand.”

But he couldn’t. Ballmer eventually told the Thompson and the board “At the end of the day, we need to break a pattern. Face it: I’m a pattern.” And that was what led his decision to retire earlier than he wanted to.

“Maybe I’m an emblem of an old era, and I have to move on,” Ballmer told the Journal. “As much as I love everything about what I’m doing, the best way for Microsoft to enter a new era is a new leader who will accelerate change.”

That is remarkable, especially when you contrast it to the buck passing going on in Washington over the epic fail of HealthCare.gov. There you have a case of no one taking responsibility and no one resigning or being fired. Yet Ballmer, the number two shareholder at Microsoft who would not be easy to remove, looks around at a profitable company, says I am the problem, and steps down. You have to respect that and wonder if there isn’t another CEO or two who needs to make the same admission.

And in the process, he’s taking the loathed stack ranking employee rating system with him. Microsoft announced its demise last week, and that memo was promptly leaked to the entire world.

I checked with my contact that provided so much valuable insight the last time we discussed stack ranking. This person said most people were taking a wait and see attitude, because they had been made so many promises before. HR head Lisa Brummel, whom my contact called “the most hated exec” in Microsoft, was described as looking “happy, very happy…if not relieved to change the subject.”

Microsoft’s board is meeting this week to whittle the list of candidates down to three to five, with outsiders leading the charge. The feeling is that an outsider is needed to shake things up. I couldn’t agree more.

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Microsoft, Tech

Microsoft dings Ballmer’s bonus over Windows 8, Surface RT struggles

The penalty is equivalent to half the cost of a cup of coffee at McDonalds to the average American

Microsoft’s board of directors reduced outgoing CEO Steve Ballmer’s bonus for the 2013 fiscal year, citing poor performance of Windows 8 and the $900 million Surface RT write-off, according to a filing with the U.S. Securities and Exchange Commission.
Microsoft CEO Steve Ballmer
Microsoft CEO Steve Ballmer (Photo: Microsoft)

The Redmond, Wash., company’s proxy statement spelled out the salaries and bonuses of several of its top executives, including Ballmer, new Chief Financial Office Amy Hood and Chief Operating Officer Kevin Turner, as well as now-departed managers such as former CFO Peter Klein and Office chief Kurt DelBene.

Microsoft paid Ballmer $697,500 in salary and awarded him a $550,000 performance bonus, for a total of $1.26 million for fiscal year 2013.

The bonus was less than Ballmer could have earned.

“Our Board of Directors approved an Incentive Plan award of $550,000 which was 79% of Mr. Ballmer’s target award,” stated the proxy. One hundred percent of the target would have been $696,000.

The 79% was considerably lower than Ballmer’s comparable number for the 2012 fiscal year, when he was granted a bonus representing 91% of his target.

Microsoft’s board cited both company wins and losses under Ballmer’s stewardship, but the latter included some failures that were the root of its bonus decision.

“While the launch of Windows 8 in October 2012 resulted in over 100 million licenses sold, the challenging PC market coupled with the significant product launch costs for Windows 8 and Surface resulted in an 18% decline in Windows Division operating income,” the proxy noted. “Slower than anticipated sales of Surface RT devices and the decision to reduce prices to accelerate sales resulted in a $900 million inventory charge.”

Some analysts have speculated that the $900 million write-off was the proverbial straw that broke the board’s back, and triggered Ballmer’s ouster. In an interview with the Wall Street Journal last week, however, John Thompson, the lead independent director and the head of the committee in charge of the search for a new chief executive, backed Ballmer’s explanation for his sudden retirement: He did not want to remain in the job through the long course correction to a “devices-and-services” strategy.

The proxy statement’s commentary on the strategy change, as well as the corporate reorganization announced in July, was Ballmer-neutral. “The company continued to make progress in its devices and services strategy,” the filing read.

Last year, Ballmer’s bonus was pegged at 91% of his target as the board ticked off several issues during that fiscal year, including a 3% decline in revenue for the Windows and Windows Live Division, and a fiasco where Microsoft failed to offer a browser choice screen to Windows 7 customers in the European Union.

Ballmer’s 2013 bonus of 79% was an even lower percentage than that of Steven Sinofsky last year. Then, the former Windows chief — who was ousted in November 2012 — received 90% of his target award, even though he, like Ballmer, was cited as responsible for the EU browser choice screw-up.

Other top-tier executives received 100% or more of their target bonuses for 2013.

Kevin Turner, the COO, received a cash award of $2.1 million, or 100% of his target, and Satya Nadella, who now leads the Cloud and Enterprise group, received $1.6 million, or 105% of his target. Amy Hood, the new CFO, was handed $457,443, 100% of her target incentive, and as part of her promotion, received a stock award in May of 103,413 shares that will vest over the next three years. At Thursday’s closing price, those shares had a paper value of $3.5 million.

In total compensation for the 2013 fiscal year, Turner remained Microsoft’s highest-paid executive at $10.4 million, down slightly from 2012’s $10.7 million.

Eight of the company’s top executives, including Turner and Hood, were handed additional stock grants Sept. 19, the same day Microsoft announced a retention bonus designed to keep upper management from jumping ship during the CEO search. Turner, for example, received grants currently worth $20.3 million. Hood’s award was valued at Thursday’s closing bell at nearly $3.9 million.

No one should cry for Ballmer’s lowered bonus: According to the proxy, he controls 4% of the company, with stock holdings worth $11.3 billion at Thursday’s price. Only co-founder and chairman Bill Gates holds more: 4.5%, or $12.8 billion.

The $146,000 that Ballmer did not get in his 2013 bonus is literally pocket change to the billionaire. The amount represented 0.0013% of Ballmer’s Microsoft holdings, and an even smaller percentage of his total wealth. To put that into perspective, 0.0013% of $42,693, the U.S. per capita personal income in 2012, is 55 cents, or just over half the price of a coffee from McDonalds “Dollar Menu.”

Ballmer and Gates are both on the directors slate for re-election next month when Microsoft hosts its shareholders meeting.

According to a report by the Reuters new service earlier this week, some of Microsoft’s biggest investors have urged the board to push Gates out of the chairman’s role because they are concerned he will block the board from making drastic changes and handcuff the new CEO to the devices-and-services strategy, which they question. Gates is also on the special search committee tasked by the board to recommend Ballmer’s replacement.

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