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Friday, August 5, 2005 - Page updated at 12:00 AM

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Microsoft hires Wal-Mart exec

Seattle Times technology reporter

A top Wal-Mart executive was named head of sales at Microsoft yesterday in a surprise reorganization of the software company's executive ranks.

Kevin Turner, who rose from checkout clerk at the Ada, Okla., Wal-Mart to chief executive of its Sam's Club division, starts work Sept. 8 in Redmond as chief operating officer.

Turner, 40, will lead the company's sales, marketing and internal information-systems groups and report to Chief Executive Steve Ballmer. He's getting a pay package worth up to $33.4 million.

Current and former Microsoft executives said the company is trying to increase the breadth of its executive leadership team to further the company's growth. With Turner, it's getting both a sales chief and a operating officer with deep experience managing a huge corporation.

"More than ever, Microsoft's growth opportunities abound as a result of our strong product-innovation pipeline," Ballmer said in a release. "Kevin's leadership of global technology, sales, marketing and services will help ensure we harness this potential and fully realize the growth opportunities before us."

Turner is replacing Kevin Johnson, a 13-year Microsoft veteran who is moving to an unspecified executive role. Ballmer praised Johnson in the announcement, calling him one of the company's "strongest executives," and a spokesman said his new role will be announced within a month.

"The whole thing is an example of us retaining talent and offering Kevin [Johnson] a chance to do something at a senior level of the company," spokesman Tom Pilla said.

Ballmer tried before to hire an outsider as chief operating officer. He recruited former Hewlett-Packard executive Rick Belluzzo, but they had a falling out and Belluzzo left in 2002.

"It's pretty simple," said Jon Shirley, a former Microsoft president now serving on its board of directors. "Steve Ballmer has recognized the need for someone in the chief-operating-officer position for some time. It's been mostly a matter of finding the right person."

Turner was formerly chief information officer at Wal-Mart, a company known for its sophisticated use of technology. Several of the Bentonville, Ark., company's executives were lured to the Seattle area during the dot-com boom, including Rick Dalzell, now senior vice president and chief information officer at Amazon.com.

Turner has been considered a rising star at Wal-Mart, where at 29 he became the youngest vice president, according to a biography at the Web site of his alma mater, East Central University in Ada.

To pay his way through college, Turner worked as a checker at the Ada Wal-Mart and met his wife when she pushed her cart through his line.

As head of Sam's Club, Turner was in direct competition with Costco, where Chief Executive Jim Sinegal had mixed emotions about his nemesis moving to town.

"There won't be a wake around here," Sinegal joked.

Microsoft wanted Turner enough to offer a pay package worth up to $33.4 million. He's is getting a $7 million signing bonus, a $570,000 a year salary and up to 624,000 shares of performance-based stock awards that come over three years if performance goals are reached. He's also getting 320,000 shares that vest fully when he retires. At yesterday's closing price of $27.32, the stock awards are worth up to $25.8 million.

Turner's employment agreement said the stock grants are intended to replace equity compensation he's forfeiting at Wal-Mart.

"It's obviously commensurate with the level of experience and the talent that Kevin brings to the table," Pilla said.

Something was apparently afoot with Johnson, who has been Microsoft's sales chief for nearly three years. Last month he received a 19 percent raise — to $570,000.

Microsoft still lacks a president, but it's unclear whether Johnson or anyone will fill that role. Shirley doesn't think a president is needed, given the company's structure and how active Ballmer is as chief executive.

The Kevins' salaries trail only those paid to Ballmer and Chairman Bill Gates, according to the company's last proxy in September. But other senior executives will probably get raises as well this year.

Turner is the highest-ranking executive to be recruited by Microsoft since Belluzzo was hired in 1999. Earlier this year, the company hired Chris Liddell, formerly from International Paper, to be the new chief financial officer.

Other outsiders have had mixed results in the intense culture of the executive team.

Two outsiders hired as president lasted just a few years apiece in its early years, but Shirley and former Chief Operating Officer Bob Herbold both stayed seven years and remain close to the company.

Herbold, who knew Turner as a customer, said Turner's work ethic will help.

"I think he'll do fine," Herbold said. "He's a down-to-earth individual who is very open to talk with and likes to roll up his sleeves and get to work, and that's what it takes at Microsoft."

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

Copyright © 2005 The Seattle Times Company

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