It's been more than six months since Satya Nadella was appointed as CEO of Microsoft (NASDAQ:MSFT), allowing longtime leader Steve Baller to retire. But Ballmer still cast a large shadow in Microsoft's boardroom, holding on to his seat and 333 million shares of the company.

All of that changed on Wednesday. Steve Ballmer penned an open letter to Nadella, in which he announced his retirement form Microsoft's board of directors as well.

"In the six months since leaving, I have become very busy," Ballmer wrote. "I see a combination of the [Los Angeles] Clippers, civic contribution, teaching and study taking a lot of time."

With so many new demands on Ballmer's time, he saw fit to step down from the board. The move is effective immediately, leaving Microsoft with a total of 10 directors. He's poised to teach a class at the USC School of Business this fall, not to mention the start of the basketball season. Having spent a cool $2 billion to acquire the Clippers, the team will be a priority for Ballmer.

Steve Ballmer at a Seattle Supersonics game, 2005. Image source: Wikimedia Commons.

Ballmer didn't serve on any of the board's committees, in keeping with leaving committee work to independent directors.

Nadella accepted Ballmer's farewell with a profusion of thanks and kudos. "While your insights and leadership will be greatly missed as part of the board, I understand and support your decision," he wrote.

So if Ballmer was holding Nadella back from tampering with the ex-CEO's legacy in any way, that shouldn't be a problem anymore. Throw in the fact that Microsoft founder Bill Gates stepped down from the chairman's post to a regular board seat when Nadella took office, and it's clear that a whole new era has started in Redmond, Washington.


Ballmer's successor, Microsoft CEO Satya Nadella. Image Source: Microsoft.

Nadella has already started making his mark on the company, announcing a heavy focus on cloud and mobile businesses alongside drastic layoffs. Neither Ballmer nor Gates have vetoed any of these moves. So Ballmer's final exit may not make much of a difference after all, given the loose reins he's been keeping on the new CEO.

That being said, Ballmer isn't entirely out of the Microsoft game--he'll still be around as a very large investor.

"I hold more Microsoft shares than anyone other than index funds," Ballmer wrote, "and love the mix of profits, investments and dividends returned in our stock. I expect to continue holding that position for the foreseeable future."

He does indeed own more Microsoft shares than Bill Gates, and his 4.4% stake in the company is larger than all but two major mutual fund managers. That's enough to make Nadella acknowledge the new relationship he'll have with his old boss and colleague.

"We wish you incredible success," Nadella wrote. "I also look forward to partnering with you as a shareholder."

So the big, bald, and boisterous Ballmer is gone from all official Microsoft functions but ready to become a sort of activist investor instead.

I like what Nadella has done with Microsoft so far. Under Ballmer, Microsoft's bark was always worse than its bite. Nadella is trying new ideas like publishing iPad and Android versions of Microsoft Office, or obsessing over user-first thinking. The throwback traditions of the Ballmer and Gates eras should fade quickly under these circumstances, and the company might just grow some teeth again.

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days.

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