Microsoft Says Board Will Complete CEO Search in 2014

Microsoft Corp. (MSFT), which is seeking a replacement for Chief Executive Officer Steve Ballmer, said it anticipates completing the search in the early part of 2014.

Lead independent director John Thompson, who is heading Microsoft’s CEO search committee, wrote in a blog post that the Redmond, Washington-based company has identified more than 100 candidates, talked with several dozen and has since focused on about 20 individuals, whom he deemed “extremely impressive in their own right.”

“As you would expect, as this group has narrowed, we’ve done deeper research and investigation, including with the full board,” Thompson wrote. “We’re moving ahead well, and I expect we’ll complete our work in the early part of 2014.”

The timeline underscores the hurdles of finding a new leader for the world’s biggest software maker. Ballmer said in August that he planned to retire within a year. With no succession plan in place, the board was working toward speedily finding a successor as early as the end of this year, people with knowledge of the process have said.

Related: Microsoft’s Nadella Studies Startup Roadmap Amid Search

Yet some candidates have dropped out of the running. Steve Mollenkopf, Qualcomm Inc.’s No. 2 executive, was named CEO of the wireless chipmaker on Dec. 12, taking him out of the picture to replace Ballmer. While Alan Mulally, Ford Motor Co.’s CEO, is considered a candidate to lead Microsoft, his star has faded amid concerns about his age, 68, and lack of technology experience, people with knowledge of the search have said. EBay Inc. CEO John Donahoe and former VMware Inc. CEO Paul Maritz declined to be considered, people with knowledge of the matter have said.

‘Complex Role’

Other candidates are still in the mix, including Microsoft’s cloud-computing chief Satya Nadella, Executive Vice President Tony Bates and former Nokia Oyj CEO Stephen Elop, the people have said.

Last month, Microsoft co-founder Bill Gates said at the company’s shareholder meeting that he and other directors have met with “a lot of CEO candidates” and that “it’s a complex role to fill.”

The software maker is going through its biggest transition in decades, seeking a new leader while it adopts a new corporate structure focused on devices and services. Microsoft is buying Nokia’s handset unit, its largest acquisition by number of employees, as it adapts to a technology landscape where consumers and businesses favor mobile devices and Web-delivered software.

Two CEOs

Mark Moerdler, an analyst at Sanford C. Bernstein & Co., said it’s important for Microsoft to find a replacement sooner rather than later “to resolve investor questions and to formally and finally define the company’s core direction.” He rates the shares the equivalent of a buy.

Microsoft has only had two CEOs in its 38-year history and both have been company insiders. Gates co-founded the software maker in 1975 and led as CEO until 2000, when he passed the reins to longtime executive Ballmer.

Frank Shaw, a spokesman for Microsoft, declined to comment beyond the blog post or to make executives available for interviews.

Jay Cooney, a spokesman for Ford, said there is no change from a plan the company laid out in November last year that Mulally would remain its CEO through at least 2014.

“Alan remains absolutely focused on progressing the One Ford plan,” he said. “We do not engage in speculation.”

Susan Sheehan, a spokeswoman for Nokia, declined to comment.

Microsoft fell 1 percent to $36.52 at the close in New York.

More Transparency

Companies have been compelled to be more transparent on succession issues, especially as activist investors bring more scrutiny to company management, said Joel Koblentz, senior partner at executive recruiter The Koblentz Group in Atlanta.

Investor Bill Ackman’s public campaign to get a new CEO at J.C. Penney Co. prompted the company’s other directors to publicly address the CEO search and the plans for the process. That search is still under way.

Chip Wilson, founder of retailer Lululemon Athletica Inc., discussed the search for a CEO in a November Bloomberg television interview before the company announced a decision earlier this month. The maker of exercise apparel had been under pressure from investors after it recalled yoga pants for being too sheer.

Microsoft earlier this year struck a cooperation agreement with activist investor ValueAct Holdings LP. A ValueAct executive is set to join the company’s board in early 2014.

“Boards always want to have an orderly process of succession, but the balance between secrecy and transparency seems to be shifting,” James Post, a professor at Boston University School of Management, said in an interview. “For sure, there’s no going back to the old way where only private searches are done.”

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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