Gates' stake in MS drops 4.5 per cent

And outside MS, he maybe has around $13 billion

Bill Gates' share of Microsoft has dropped from 19.8 per cent to 15.3 per cent since 29 January, according to Microsoft's proxy statement released yesterday. He held 787,055,600 shares worth $72.5 billion at the closing price of $92.125. Mrs G has 214,460 shares worth $19.8 million. The couple gave around $15 billion to their private charity, the Bill and Melinda Gates Foundation this year. We estimate that Bill has around $13 billion in non-Microsoft investments, which could be useful for a rainy day. Paul Allen is still being the second largest shareholder with 260,723,896 (5.1 per cent, worth $24 billion); Steve Ballmer has 239,626,854 shares (4.7 per cent, worth $22 billion); and the remaining executive officers and directors have a mere 0.6 per cent of the shares. Former Microsoft president Jon Shirley, a Microsoft director since 1983, currently has $930 million in Microsoft shares and has been in and out of the billionaire's club as Microsoft's share price has gone up and down. On 10 September there were 5,141,508,124 common shares outstanding, held by 93,850 shareholders, giving a market capitalisation (excluding the preference shares) of $474 billion. As previously announced, Jill Barad, a board member since 1996, is leaving the seven-member board, and the search is on for a replacement - almost certainly female. The directors had received only a pittance in the past, but shareholders will be asked at the AGM on 10 November to approve a stock-option plan for non-employee directors. The compensation committee believed that Bill "is paid a reasonable salary" and bonus, but at $633,373 it was less than hard-man Herbold, who took home $926,158 (down on the previous year's $1,108,090 mostly on account of his bonus being reduced by $208,624). Ballmer's wages and bonus were $660,573. Although this compensation is trivial in view of the shares they hold (Herbold's exercisable and unexercisable shares are worth about $200 million), there may be some subtle messages here. Since Gates' and Ballmer's bonuses increased, COO Herbold may be just a teeny bit out of favour: he is paid more because of the deal he was able to negotiate when he joined Microsoft in November 1994. Gates was keen to not to be paid a very large sum, because of the criticism this would invite. Memo to the compensation committee: Ballmer should be paid more than Herbold since he is running the company. It is noteworthy that Bill Neukom, the general counsel, is not in the big league so far as salary or share options are concerned. ®

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