Bill Gates has one thing in common with the average Seattle-area homeowner. His salary is hardly keeping pace with his property taxes nowadays...
Bill Gates has one thing in common with the average Seattle-area homeowner. His salary is hardly keeping pace with his property taxes nowadays.
Gates received $1 million in salary and bonus this year and he’s getting a $20,000 raise in fiscal 2006, according to Microsoft filings with the Securities and Exchange Commission yesterday.
That’s barely enough to cover the $989,726 property-tax bill on his 5-acre spread in Medina, which King County valued at $125 million this year.
Chief Executive Steve Ballmer is in the same boat. He and Gates are both getting a $620,000 salary next year, up 3 percent from the $600,000 they were paid in fiscal 2005, which ended June 30. They each received a $400,000 bonus in 2005 as well.
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Neither received any stock awards, but together they already hold nearly 14 percent of all Microsoft shares.
Take-home pay was better for the other three top executives named in the proxy statement filed yesterday.
All three — Jim Allchin, Jeff Raikes and Kevin Johnson — received bigger raises, in part because of a reorganization announced last week, and stock bonuses worth more than $17 million apiece. Each of the three are presidents under the reorganization.
Executive compensation is only part of the proxy, which also gives shareholders a report on the company’s governance and calls for a vote on several issues at Microsoft’s annual meeting Nov. 9 in Bellevue.
Shareholders are being asked to elect directors and approve the company’s choice of auditor.
One new director appears in the proxy, former JPMorgan Chase Chief Financial Officer Dina Dublon, who joined the board in March.
Little controversy is expected over the choice of longtime Microsoft auditor Deloitte & Touche.
Some companies are being scrutinized for paying auditors big consulting fees. About $2 million of the $22 million Microsoft paid Deloitte last year was for consulting.
“As ratios go, that’s actually pretty low; we’re talking in the less than 10 percent range, which is where we want companies to be nowadays,” said Patrick McGurn, special counsel at Institutional Shareholder Services, a Rockville, Md., firm that monitors governance for big investors.
McGurn said Microsoft also gets high marks for the relatively low salaries paid to Gates and Ballmer.
“There’s so many other founders — the main one being down the coast, with [Oracle founder] Larry Ellison — who have a great deal of money as well, but still pay themselves massive amounts by options every year,” McGurn said.
“These guys have been on the side of angels with this particular issue,” he said.
They’re not in Ellison’s class, but the three other Microsoft executives named in the proxy are doing pretty well under the company’s new stock-award program. The awards, which vest over 30 months, replaced stock options, which were phased out in 2003.
Allchin and Raikes received 866,667 shares and Johnson received 692,296 shares. At yesterday’s closing price of $25.67, the awards to Raikes and Allchin are worth $22.2 million apiece. Johnson’s award is worth $17.9 million.
All three are getting raises to $600,000 in fiscal 2006, according to a separate filing yesterday. That’s a 5 percent raise for Raikes and Allchin, and a 19 percent raise for Johnson, who was formerly head of sales.
Raikes leads the business-products division. Allchin and Johnson jointly lead the platform products and services division.
A third division, which includes entertainment products, is headed by Robbie Bach, whose compensation was not in the proxy.
Gates may get a little help covering his property-tax bill from Corbis, the Seattle digital-image company he owns. The proxy reported Microsoft spent $700,000 last year buying images from Corbis but noted Gates wasn’t involved in the negotiations.
“It sounds to me as though that is the kind of figure that the term de minimus was made for,” said Nell Minow, editor of the Corporate Library, a governance research firm in Portland, Maine.
“Microsoft gets above-average ratings from us in just about every category except for board memberships — it’s a little cozy,” she said. “We tend to think of them as a good-guy company in the world of corporate governance.”
Brier Dudley: 206-515-5687 or email@example.com