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'Nadella Effect' makes Ballmer US$2.8 billion richer

Gregg Keizer | July 23, 2014
And since Thursday's downsizing, CEO Satya Nadella has an extra US$1.3 million in his portfolio.

Former Microsoft CEO Steve Ballmer's "devices and services" strategy may be in tatters, discarded by his successor, Satya Nadella, but Ballmer must be smiling all the way to the bank.

According to U.S. Securities and Exchange (SEC) documents, Ballmer owns more than 333 million shares in Microsoft. At Monday's closing price of $44.83, those shares were valued at $14.9 billion.

On the day before Ballmer stepped aside, Microsoft's share price was $36.48, putting his portfolio's worth at just over $12.1 billion. Because of the 23% increase in share value since Feb. 3, Ballmer's Microsoft holdings have appreciated in value by almost $2.8 billion.

The "Nadella Effect" -- Wall Street's assumption that the new CEO will turn around Microsoft's fortunes -- has also put more on the ledger sheets of other executives, past and present.

Co-founder and former CEO and chairman Bill Gates owns 318 million shares -- he ceded his shareholder crown to Ballmer in May -- and has seen his Microsoft stock value soar by nearly $2.7 billion in less than six months, to $14.3 billion as of yesterday. Gates has regularly sold 80 million shares each quarter, however, as he slowly empties the portfolio.

Further down on the strike-it-rich tally board were chief operating officer Kevin Turner, whose holdings jumped by $21.3 million to $61 million since Nadella took over; and Eric Rudder, the 25-year veteran of the firm who has led the Advanced Strategy group since the mid-2013 reorganization. Rudder's Microsoft portfolio increased in value by $7.7 million to $41.2 million under Nadella's watch.

But what of the new CEO?

Nadella's holdings currently stand at just over 554,000 shares -- less than 0.2% of Ballmer's -- but the value of those shares has climbed by $4.6 million since his accession to the top job. Nadella's Microsoft shares were worth approximately $24.8 million as of Monday.

However, Nadella has been promised another 975,777 shares over the next four years if he stays in the job. Those shares had a paper value of $43.7 million yesterday.

Last week, Nadella announced Microsoft's largest-ever lay-offs when he said 18,000 employees, most inherited from the $7.2 billion acquisition of Nokia's handset business, will be cashiered in the next 12 months. The bulk of those jobs were cut last week.

The week before, Nadella had sent Microsoft workers a 3,100-word epistle that, among other things, said the company would abandon Ballmer's strategy of turning the firm into a "devices and services" seller. Instead, Nadella added "productivity and platforms" to his earlier "mobile-first, cloud-first" phrase, and said Microsoft would "reinvent productivity to empower every person and every organization on the planet to do more and achieve more."


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