Microsoft executives hit with pay cut after tough year

Microsoft's top executives have seen their pay drop following the worst financial year in the company's history.

According to financial documents filed with US regulators, the American software giant reduced the sums paid to its leading executive officers following its first ever drop in revenues and the decision to lay off 5,000 staff.

Although most of the company's top executives saw salary increases of around $20,000, a mix of cash bonuses and smaller stock increases meant their overall pay packets decreased by around 22% overall.

Chief executive Steve Ballmer earned $1.26m for the 2009 financial year, down from $1.35m in 2008, while chief operating officer Kevin Turner saw his remuneration drop from $8.6m last year to $5.4m this year.

Financial chief Christopher Liddell had his pay packet reduced by 28% to $3.5m. The company's highest-paid executive, Robbie Bach - who is in charge of Microsoft's Xbox games consoles and Zune music players - saw his overall pay fall to $6.2m from $8.2m in 2008.

In fact the only senior executive to see an increase in pay was Stephen Elop, who heads up the company's business division. However, his pay increase - rising from $4m last year to $4.8m in 2009 - is largely attributed to the fact that he joined the company part of the way through the last financial year.

Although stock awards were significantly lower in 2009, however, none of Microsoft's travails seemed to significantly reduce the bonuses awarded to top staff.

Despite the company's unprecedented struggles - including the first significant layoffs in its 34-year history, and the first slowdown since the company went public in 1986 - Ballmer was still awarded a $600,000 bonus, with others given even higher rewards.

And although can be blamed on the recession - which has seen a drop in spending by many companies and consumers - other events over the past year have proved troublesome.

A series of legal predicaments - including an ongoing dispute with European regulators - have taken their toll on the company finances, while its drawn-out attempt to buy Yahoo's search engine business also hit the bottom line.

And though the lower pay awards will undoubtedly carry something of a sting, it is unlikely to get them in too much trouble with their bank managers. Ballmer, for example, remains one of the world's richest people thanks to the significant share of Microsoft that he owns - a fortune estimated at $11bn by Forbes magazine.