Microsoft Cuts Bonuses For Gates, Other Execs

Microsoft posted record sales and profit for the fiscal year ended June 30, but five senior executives, including Chairman Bill Gates, took pay cuts.

While Microsoft boosted most of those executives' base salaries, it cut their bonuses.

In its proxy statement mailed to shareholders yesterday, Microsoft disclosed that Chief Operating Officer Bob Herbold, the company's highest-paid executive, took a 6 percent cut in combined salary, bonus and other compensation to $1.2 million. President Steve Ballmer's pay dropped 7 percent to $547,827. Chairman Bill Gates' pay fell 8 percent to $542,297.

Microsoft spokeswoman Caroline Boren declined to discuss specific reasons for bonus reductions, referring to a report in the proxy to the Microsoft board from the compensation committee.

The compensation committee said bonuses are based on executives' ability to achieve "aggressive revenue and profit goals as an incentive for superior individual, group and corporate performance." So even though Microsoft posted a profit of $4.5 billion on sales of $14.5 billion, the results likely didn't exceed board expectations.

But don't cry for Microsoft executives. Gates is the wealthiest man in the world, with net worth approaching $60 billion. And Ballmer, with net worth topping $13 billion, isn't suffering.

Herbold, who cashed in $3 million in stock options, still holds $115 million worth of unexercised options. Group Vice President Paul

Maritz supplemented his $521,463 in annual pay with $13.3 million in cashed-in stock options. He still holds $238.6 million worth of unexercised stock options. And even though Michel Lacombe, the president of Microsoft Europe, saw his salary and bonus fall 3 percent, he still holds unexercised stock options worth $105.2 million.