Shareholder activism has its rewards. Microsoft has forged an unusual pact with ValueAct Capital, which bought a $2 billion stake in the company in April. That was less than 1 percent of outstanding shares, but it still made ValueAct one of Microsoft’s 15 largest shareholders.
ValueAct president Mason Morfit now gets access to “selected Microsoft directors and management to discuss a range of significant business issues” and, he gets a board seat if he wants it — and everyone’s pretty sure he wants it. Microsoft’s annual shareholders’ meeting is slated for November 19.
Microsoft’s been under the gun for years for a flagging share price and concerns about top management. By most accounts those concerns forced an about-face by CEO Steve Ballmer and Chairman Bill Gates that led to Ballmer’s decision, made public last week, to step down as CEO within the year. Ballmer will remain on the board.
Nomura Securities analyst Rick Sherlund has for the last few months noted ValueAct’s stake in Microsoft as impetus for major leadership changes at the Redmond, Wash. software giant.
In a statement Friday, Ballmer said: ”Our board and management team are committed to enhancing growth and value for Microsoft shareholders, and we look forward to ValueAct Capital’s input.”
Several long-time Microsoft watchers have said privately that ValueAct’s goal all along was to force changes at the top of Microsoft which, arguably it has already done. Now, with a board seat and regular access to management, it could do more.
Remember what they say about letting a camel’s nose into the tent: First, it’s the nose, pretty soon you get the whole camel.