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Is a 4.5 Percent Microsoft Stake the Tipping Point for Bill Gates?

Microsoft is Bill Gates' company in the popular imagination.

After all, he co-founded the company 38 years ago and outlasted co-founder Paul Allen. Gates is also reported to be spending a lot more time on the Microsoft campus lately. 

However, the August announcement that CEO Steve Ballmer would retire in 12 months fueled questions about how much control Gates still had in the boardroom. More possible evidence that his legendary grip on the board might be slipping comes in the form of reports of a lobbying campaign by three top investors to force Gates out. As reports about the campaign note, investors have been calling for Ballmer's head for years over the stock's flat performance, but the recriminations rarely included Gates.

In an effort to fund his philanthropic efforts and to gradually remove himself from Microsoft, Gates set a plan in motion years ago to reduce his financial stake in the company. If the plan continues, he'll have no financial stake in Microsoft in 2018, according to Reuters.

A look at proxy statements filed by Microsoft from 1994 up through the 2013 document filed on Friday shows how much of his financial influence over Microsoft Gates has sold off.

He owned 49 percent of the company when Microsoft went public in 1986. By 1994, he'd already cut his stake in half to 24.6 percent. In 2000, when he handed the CEO reins to Ballmer and stepped into the chairman and chief software architect role, he still held 13.7 percent of the common shares. When he backed away from any day-to-day role in 2008, he owned 8.76 percent. This year, Gates is down to 4.52 percent, which is close to Ballmer's current stake of 3.99 percent.

Although Gates is still the largest individual shareholder, it's possible that his diminishing financial stake has reached a tipping point that no longer warrants him getting his way in the boardroom.

Posted by Scott Bekker on October 07, 2013


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