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Today I received the Microsoft 2006 shareholders’ report. As a MS shareholder, I always enjoy reading how the company did. However, what I really enjoy reading is the proxy statement for the annual meeting of shareholders. The statement lays out where the meeting will be held, what will be voted on and tries to solicit my vote. The statement also discloses how much salary and bonus the executive team made. According to the proxy, both Billl Gates and Steve Ballmer made a based salary of $616,667 and a bonus of $350,000. That is actually low for a company the size of Microsoft. The highest paid executive was newly hired COO Brian Turner – he received total compensation of $16,162,876 ($7 million of that was a signing bonus).
What really caught my eye wasn’t how much the executive team made, it was how much a member of the Board of Directors made for attending a meeting. The Microsoft Board has 10 people in it.
- Bill Gates
- Steve Ballmer
- James Cash Jr.
- Dina Dublon
- Raymond Gilmartin
- Ann McLaughlin Korologos
- David Marquardt
- Charles Noski
- Helmut Panke
- Jon Shirley
The Board of Director hold regularly scheduled quarterly meetings. There are also quarterly committee meetings, which are held the day after the quarterly meeting. In addition to these meetings, there might be one or two special meetings. All together, the Board of Directors met nine times in 2006. How much does a director make for attending nine meetings?
- $200,000 per year with $120,000 provided in the form of a stock award
- Additional $10,000 for chairs of the five Board committees
- Additional $10,000 for members of the Audit Committee
- Reimbursement of “reasonable expenses” incurred in connection with board-related activities
In addition, to assist directors in developing an in-depth understanding of Microsoft’s business and products, directors are provided with a Tablet PC for their use while they serve on the Board. Each year, directors also may receive an additional personal computing device and a game or media player device, each with associated peripherals, and Microsoft software and subscription service with an aggregate value of less than $10,000.
That sounds like a pretty good gig! Make a minimum $200,000 to attend nine meetings! Of course, I am sure the Board has lots of important work to do at these meetings. However, the compensation seems extremely high. Other companies, of which I’m a shareholder of, don’t paid their directors anywhere near this much.
On another note, both Bill Gates and Steve Ballmer elected not to receive any compensation for being on the Board of Directors. Gee, How nice of them.