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Originally published March 11, 2014 at 7:38 PM | Page modified March 13, 2014 at 6:29 AM

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Tiff over, ValueAct’s Morfit joins Microsoft’s board

Investment firm’s president appointed as part of an agreement to prevent a proxy battle.


Seattle Times technology reporter

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Microsoft’s board now has 11 members with the addition Tuesday of G. Mason Morfit, president of ValueAct Capital.

The move was expected — the result of an agreement announced last August in which Microsoft’s board averted a proxy battle. Under the agreement, ValueAct Capital won the option of a board seat and regular meetings with Microsoft executives.

ValueAct, a San Francisco-based investment firm that manages more than $14 billion in assets, had accumulated just under a 1 percent stake in Microsoft at the time. It had been pressuring the software giant to take steps to increase shareholder value.

Pressure from ValueAct may also have led to former CEO Steve Ballmer’s earlier-than-expected retirement from that position — though Ballmer has denied ValueAct had any role in his decision.

“We’ve had the opportunity to work with Mason over the past six months, and we look forward to working with him more closely as a member of the board,” John Thompson, Microsoft board chairman, said in a statement Tuesday. “Mason brings valuable insights given his financial background, his extensive experience as a public-company director and his perspective as a significant Microsoft shareholder.”

Morfit, who will sit on the board’s audit committee, said in a statement:

“Microsoft is an iconic global company with tremendous long-term potential. I am honored to be joining the board, and I look forward to working with Satya Nadella, Chairman John Thompson and the rest of the board of directors to help continue to drive growth and value for all shareholders.”

Morfit reportedly wants Redmond-based Microsoft to reduce its focus on Windows and to get rid of or reduce its efforts in the hardware and consumer-products areas, while emphasizing its corporate and cloud businesses, according to an earlier Bloomberg report, which cited people familiar with the matter.

But veteran Microsoft analyst Rick Sherlund, with investment bank Nomura, said, “The exact agenda that ValueAct might bring to the table is a bit unclear at the moment.

“I would expect that they would advocate for greater connectivity between the board and the major shareholders of the company,” Sherlund said. “I think you can expect that they are extremely thoughtful, they do their homework and that their endgame will be to take a multiyear view of fixing the business and enhancing shareholder value.

“I don’t think their focus is a short-term quick fix and reward to shareholders,” he said. “It’s a balanced approach: What you need to do to fix the business in the long term and what you also need to do to enhance shareholder value in the short term, including cost cutting and share repurchase.”

Before joining ValueAct, Morfit worked in equity research at Credit Suisse First Boston. He also serves as a director of Valeant Pharmaceuticals International and is a former director of Advanced Medical Optics, C.R. Bard, Immucor, MSD Performance, and Solexa, according to ValueAct.

He received his bachelor’s degree from Princeton University.

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com. On Twitter @janettu.

Information from The Seattle Times archives was used in this report.



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