How Microsoft Corporation (MSFT)’s Former CEO Steve Ballmer Became One of the Richest Americans Through Holding Stock

Steve Ballmer, the former CEO of Microsoft Corporation (NASDAQ:MSFT), made it to the Forbes 400 list in 2014 and climbed three positions, being currently 18th most wealthy person in America with a net worth of $22.3 billion. With almost all his life dedicating to Microsoft, Ballmer made an impressive fortune, even though he did not immediately get a high-ranking position at the company. Mr. Ballmer joined Microsoft in 1980, being the 30th employee, with a title of “business manager.” In a recent article, Forbes discussed Mr. Ballmer advancement on Microsoft’s career ladder. Even though Ballmer did not get any shares of the company upon joining, he got a sweet deal from Bill Gates and Paul Allen, which allowed him to get 10% of all profit growth that he could generate aside from a $50,000 annual base salary.

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As Microsoft Corporation (NASDAQ:MSFT) started to surge at a very impressive pace, Ballmer’s cut of the profits got higher and higher. Later on, before the company went public, Ballmer, together with Microsoft venture investor, Dave Marquardt, elaborated a new capital structure, under the terms of which the founders of the company, Gates and Allen would get 84% of the company (they hold 100% earlier) and Ballmer would receive around 8%, but in return he had to renounce the profit-sharing part of the deal.

However, not both founders approved immediately the new plan. As Ballmer said, quoted by Forbes, Allen wanted to give Ballmer up to 5% of the company. Since both Gates and Allen had to cut from their stakes to restructure Microsoft Corporation (NASDAQ:MSFT), Gates proposed to cover the majority of Ballmer’s 8% from his own interest and Allen contributed with just enough to cover his share that would be needed to get Ballmer 5% of the company.

In this way, Microsoft Corporation (NASDAQ:MSFT) went public in 1986 and with Gates and Allen selling the majority of their positions in Microsoft to diversify their holdings, Ballmer kept his position. As the latest filings with the Securities and Exchange Commission show, Mr. Ballmer owns roughly 333.25 million shares of Microsoft, which give him a stake of 4.04% of the company. At the current price of the stock, Mr. Ballmer’s position is worth $15.38 billion, which means that over a half of Mr. Ballmer’s net worth is in Microsoft Corporation (NASDAQ:MSFT) stock. By comparison, Bill Gates owns around 298 million shares of Microsoft, which gives him a 3.61% stake.

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