The 2019 letter from a Microsoft Corp. engineer reporting an affair with Bill Gates that preceded his exit from the board wasn't the first time some Microsoft directors encountered the billionaire's inappropriate behavior with female employees.
More than a decade earlier, Microsoft executives discovered emails between Mr. Gates and a midlevel female employee at the company while Mr. Gates was still an employee at Microsoft and chairman of the board, according to people familiar with the matter. In the messages, the then-married Mr. Gates was flirtatious and propositioned the female employee, the people said.
Two top Microsoft executives, then-General Counsel Brad Smith and then-Chief People Officer Lisa Brummel, met with Mr. Gates and told him the behavior was inappropriate and needed to stop, the people said. Mr. Gates didn't deny the exchanges, told the executives in hindsight it wasn't a good idea and said that he would stop, the people said.
The executives briefed some members of Microsoft's board, the people said, and a board committee discussed the matter. The board concluded no further action was warranted because there wasn't physical interaction, the people said.
Microsoft spokesman Frank Shaw said that in 2008, shortly before Mr. Gates retired as a full-time employee, the company became aware of the emails sent in 2007. In the emails, Mr. Gates proposed meeting the female employee outside of work and off campus, Mr. Shaw said. "While flirtatious, they were not overtly sexual, but were deemed to be inappropriate," he said. Mr. Shaw said the employee never made a complaint about the incident, which hasn't been previously reported.
A spokeswoman for Mr. Gates, Bridgitt Arnold, said in a written statement: "These claims are false, recycled rumors from sources who have no direct knowledge, and in some cases have significant conflicts of interest."
Mr. Gates, one of the world's richest people, was Microsoft's chief executive until 2000, a full-time employee until 2008 and chairman until 2014. He served on the Microsoft board for more than four decades until he resigned his seat in March 2020. The following year, Mr. Gates and his wife, Melinda French Gates, filed to end their marriage of 27 years. The divorce was finalized in August. The two continue to jointly lead the Bill & Melinda Gates Foundation, one of the world's largest philanthropies.
At the time Mr. Gates resigned from the Microsoft board, a board committee had hired a law firm to investigate a female engineer's 2019 letter alleging a prior sexual relationship with Mr. Gates, The Wall Street Journal reported in May. This wasn't the same woman that Mr. Gates earlier had been warned not to pursue, some of the people familiar with the matter said. Mr. Shaw said that the relationship occurred around 2002 but Microsoft didn't become aware of it until 2019.
The Journal has since learned more details about how Microsoft's board managed the 2019 investigation. Mr. Smith, who is now Microsoft's president and vice chair, and CEO Satya Nadella were among the executives who reviewed the 2019 letter, according to people familiar with the matter.
Microsoft's board chair at the time, John W. Thompson, asked other members of the committee reviewing the letter not to share the existence of the investigation with the full Microsoft board citing concerns about the sensitive nature of the matter, the people said. Board members who read the letter had to return their copy to Microsoft's general counsel, the people said.
Several lawyers who advise boards said that typically, when a board decides whether to conduct an investigation, the full board makes a decision to move forward for approval and the full board is aware of a continuing investigation.
"If you're going to conduct an investigation that needs independent advisers, you need board approval," said David Berger, a partner who specializes in corporate governance at law firm Wilson Sonsini Goodrich and Rosati, who also advises boards.
Microsoft's Mr. Shaw said under the board's governance guidelines, it delegated the nominating and governance committee authority to hire outside lawyers. "While governance best practices are always evolving, the Board Chair and the Committee, with advice from outside legal counsel, decided to use the responsibility given to it and move forward with the initial stages of the review, recognizing that the matter could then move to the full Board in its later stages," he said in a written statement.
Mr. Gates relinquished his board seat after some directors decided he should step down but before the investigation was completed, the Journal previously reported. Mr. Gates's spokeswoman has said he had an affair almost 20 years ago, it ended amicably and the board's review played no role in his departure. Microsoft said the board committee conducted a thorough review and provided support to the employee who made the complaint.
Several current and former Microsoft board members and executives said they believed the concerns about Mr. Gates's behavior with female employees were properly handled. They said attitudes and protocols have changed in recent years with the #MeToo movement.
Maria Klawe, a Microsoft director from 2009 to 2015 who said she wasn't aware of any concerns about Mr. Gates and female employees, said more broadly she felt he behaved at times as though rules didn't apply to him.
"He certainly gave the impression that he felt that he had a standing that gave him a particular, a set of rights, that other people wouldn't have," said Ms. Klawe, president of math and science-focused Harvey Mudd College.
Mr. Shaw and Ms. Arnold, the spokeswoman for Mr. Gates, declined to comment on Ms. Klawe's remarks.
Much earlier than the 2019 letter and the 2007 emails, at least one Microsoft board member was notified by a top executive about a romantic relationship that Mr. Gates, then the CEO, was having with a female Microsoft executive in 1992, according to a person familiar with the matter. The full board wasn't informed of the matter, the person said. The woman wasn't Ms. French Gates, this person said.
Ms. French Gates was a Microsoft employee when she first met Mr. Gates in 1987. They married in 1994 and Ms. French Gates stopped working at Microsoft in 1996, the same year the couple had the first of their three children.
Mr. Shaw said Microsoft isn't aware of any report of a concern raised about a romantic relationship between Mr. Gates and a female employee in that time frame. Ms. Arnold declined to comment.
Mr. Gates remains a technical adviser to Mr. Nadella, who took over as Microsoft's board chair in June for Mr. Thompson, who is now lead independent director. A Microsoft spokesman said at the time the chairman change was unrelated to Mr. Gates's exit from the board.
"He's very engaged on things that he cares about," Mr. Nadella said when asked about Mr. Gates during a recent conference. Mr. Nadella said that the company had changed from when Mr. Gates was its leader and that he and his team were responsible for shaping its current workplace culture. "We're not perfect by any stretch," Mr. Nadella said, "but we care deeply about all topics of our culture and we're working it every day."
Aaron Tilley contributed to this article