- September 1, 2013 06:27pm EST
Microsoft appears set on stopping any kind of proxy fight within its board of directors, recently signing an agreement with one of the company's largest shareholders that prohibits San Francisco-based ValueAct Capital from participating in any kind of proxy campaign going forward.Additionally, ValueAct has agreed to not do anything that "constitutes an ad hominem attack on, or otherwise disparages" either Microsoft, its directors, or any of the company's former directors.
Of course, this assurance – and silence – doesn't come free. In return, Microsoft has agreed to give ValueAct Capital president Mason Morfit the option to join Microsoft's board of directors starting after the company's 2013 annual shareholders meeting.
It's currently unclear whether Morfit will replace one of Microsoft's existing directors – perhaps even departing CEO Steve Ballmer himself – or whether Microsoft will instead choose to expand its board, possibly up to a maximum of 12 total members.
"Our board and management team are committed to enhancing growth and value for Microsoft shareholders, and we look forward to ValueAct Capital's input," said Ballmer in a statement released Friday.
The announcement officially caps a bit of growing speculation that ValueAct – which owns just around 0.8 percent of Microsoft's shares of common stock — was soliciting shareholder support for a potential proxy fight in an effort to address Microsoft's relatively unimpressive stock price.
To put that bit into perspective, Microsoft's stock hovered at around $28 to $29 all of ten years ago. Since then, it's seen a high of just over $37 around the latter part of 2007, and it now splits the difference at $33.40 as of Friday's close.
Contrast that to, say, Apple, which has seen its stock price jump from the teens to the 700s in a comparable period of time. Admittedly, it hit the brakes around the second half of 2012 and now sits at $487.22 as of Friday, but it doesn't take a financial genius to see which company might have been the better investment a decade prior.
According to a Friday report by the Seattle Times' Jay Greene, it's expect that ValueAct will continue to try and push Microsoft in directions that will allow the company to deliver a much-needed jolt to its share price. This could include pressuring Microsoft to increase the dividends its offers or convincing Microsoft to initiate a stock buyback plan.
And it's certainly possible that ValueAct has already managed to do a little bit of behind-the-scenes maneuvering related to Microsoft's largest announcement as of late. Though outgoing CEO Ballmer denies it, it's widely speculated that ValueAct had some role in the executive's somewhat-sudden (and somewhat-unexpected) announcement that he'll be stepping down within the year.
