Report: Nadella Negotiating Contract Terms with Microsoft Board

Microsoft (MSFT) heir-apparent Satya Nadella already is in closed-door negotiations on the terms of his contract to ascend to the company’s helm as Steve Ballmer’s successor, according to a new report in The Wall Street Journal.

Nadella, Microsoft’s current Cloud and Enterprise boss and a 22-year company veteran, is said to have emerged from a group of candidates, including incoming devices chief and former Nokia (NOK) chief Stephen Elop and Strategy boss Tony Bates—as the board’s pick for chief executive not only for his extensive technical knowledge but also his understanding of the company’s rich history and culture as crafted by chairman Bill Gates and Ballmer, the only two leaders in its 38-year history.

Equally as important, Nadella’s anticipated crowning indicates the board wanted a new boss who wouldn’t stray too far from Ballmer’s existing blueprint.

According to sources cited in the Journal’s report, Nadella requested that Gates help him with his new chief executive role by “spending more time on technology and strategy.” Nadella is said to have told the board that advice from Gates is what he needs to be successful in his new chief executive role. That suggests that with Nadella’s rise to the top, the board may ask Gates to step down as chairman, as rumored in earlier reports.

Microsoft director John Thompson, the former IBM (IBM) and Symantec (SYMC) executive, has been mentioned as a possibility to replace Gates as chairman. But Thompson is said not to love the idea and whether Microsoft’s board is willing to enact two dramatic changes at the top remains an open question at this point.

The vendor’s board is slated to meet next week to rubber-stamp Nadella’s contract deal and to mull appointing a new chairman to replace Gates, the report said.

While Nadella may not be the perfect candidate to outsiders, he may be just that to Microsoft’s board. Although he has no experience running a company of Microsoft’s size, he has taken Microsoft’s former Server (now Cloud and Enterprise) unit to a $20 billion business since 2011. Microsoft posted annual sales in FY 2013 of some $78 billion.

In a December blog, Thompson reiterated Gates’ comments at the company’s annual shareholders’ meeting a month earlier that Microsoft’s new chief had to understand its complex business model and command the experience to lead the company’s technical organization and talent.