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Microsoft’s CEO search rattles boardrooms

– It wasn’t long after Ericsson Chief Executive Officer Hans Vestberg was identified as a contender for the top job at Microsoft before phones were ringing off the hook at the telecom supplier’s Stockholm offices.

The revelation last month was the main topic in at least one hastily convened meeting the next morning, according to a person who attended and isn’t allowed to speak publicly on the matter.

A senior engineer in Stockholm said he scanned headlines first thing that day and was shocked by the news, even as he took pride in the prospect of Vestberg running Microsoft.

The candidacy is likely to be discussed at an Ericsson board meeting before the end of this month, another person said.

Vestberg joins a growing list of executives whose staff were jolted by news that their boss is being wooed by another company – in this case, to succeed Microsoft’s Steve Ballmer.

Alan Mulally of Ford and eBay’s John Donahoe have also been mentioned for the job in recent months.

Such exposure can cause frustration in the executive suite and confusion in employee ranks, diverting energy from the day-to-day execution of business. It might result in infighting among deputies seeking to fill a void left by the departing or distracted executive. To board members, it can also seem like their CEO has been double-dealing.

“The process of finding a new CEO at Microsoft is dragging out too long,” said Bill George, a Harvard Business School professor who’s on the boards of Goldman Sachs and Exxon Mobil. “It’s become unseemly to have these candidates exposed without any closure.”

Peter Wootton, a spokesman for Microsoft, and Ola Rembe, a spokesman for Ericsson, declined to comment.

“When names start showing up in the press, it instantly creates trust issues,” said Ron Lumbra, co-leader of the CEO and board-services practice for the recruiting firm Russell Reynolds Associates in New York.

Other executives who have been the subject of reports they’re in the crosshairs of another company include Hewlett-Packard Co.’s Meg Whitman, Oracle Corp.’s Mark Hurd and Foot Locker CEO Ken Hicks.

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