Gates gets a pay cut as Xbox, Vista stall growth

Bill Gates

Microsoft chairman Bill Gates has had his first pay cut in six years as the company's profit gains slow.

Gates and chief executive officer Steve Ballmer each earned US$616,667 ($929,325) in salary in the fiscal year ended in June, up 2.8 per cent from a year earlier. But both had their bonuses cut 13 per cent to US$350,000, the software maker said yesterday.

Earnings growth has stalled as Microsoft spends more to get the Xbox video-game console in stores and endures delays to the release of the Vista version of the Windows operating system. The company's stock fell 6.2 per cent during the fiscal year, compared with a 6.6 per cent gain for the S&P 500 Index.

"This is probably a function of management wanting to show that the top dogs are accountable for the numbers they produce, the same way everybody else is accountable," said Loomis, Sayles & Co fund manager Tony Ursillo.

Microsoft in August dished out performance bonuses worth almost US$1 billion to its top 900 executives, excluding Ballmer and Gates. The bonuses, put in place in 2003 to hold on to key managers, were based on performance from 2003 to 2006.

Compensation varies from year to year and is determined by the board.

Microsoft reported in July that fourth-quarter net income fell 24 per cent to US$2.83 billion. Net income rose 3 per cent for the year to US$12.6 billion as sales increased 11 per cent, the third-slowest rate in Microsoft's history.

Kevin Turner, hired as chief operating officer in August last year from Wal-Mart, received a US$7 million signing bonus and US$82,557 in relocation expenses. His salary was US$464,205, plus a US$375,000 bonus.

He received Microsoft stock valued at US$8.2 million to replace forfeited Wal-Mart equity compensation.

Windows co-president Kevin Johnson, who leads Microsoft's largest unit, had the biggest 2006 salary increase at 18 per cent, taking it to US$595,000.