Microsoft plans sweeping pay raises: CEO memo

SEATTLE Thu Apr 21, 2011 6:45pm EDT

Microsoft CEO Steve Ballmer delivers his keynote address at the Consumer Electronics Show in Las Vegas, January 5, 2011. REUTERS/Rick Wilking

Microsoft CEO Steve Ballmer delivers his keynote address at the Consumer Electronics Show in Las Vegas, January 5, 2011.

Credit: Reuters/Rick Wilking

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SEATTLE (Reuters) - Microsoft Corp plans to broadly raise salaries and stock awards to attract and retain top talent, Chief Executive Steve Ballmer said in an internal memo obtained by Reuters on Thursday.

Microsoft, which like Silicon Valley companies Google and Yahoo risks losing top employees to hot upstarts like Facebook, must improve the way it rewards and support its most talented staff, Ballmer said.

"Through our history, we have been THE place people came when they wanted to make a difference in the world through software, hardware and services," the chief executive said in a memo sent to all employees on Thursday morning.

"This is as true today as it has been at any time in our history, and the changes we're rolling out today will help ensure Microsoft continues to be the place that top talent comes to change the world."

The action follows Google's 10 percent increases this year. Microsoft plans, among other things, "important" compensation increases for divisions with fast-moving markets, including research and development and certain geographies.

All employees will have a portion of their stock awards shifted into base salary, according to the memo. Microsoft's shares are at the same level as 10 years ago.

The company will tie bonuses and stock awards closer to performance, with the review process also undergoing changes, Ballmer said.

Microsoft suspended merit-based pay raises for all employees two years ago, when it laid off 5,000 workers, or about 5 percent of staff, to cut costs. It brought back what it calls "modest" merit raises in 2010.

Last year it told employees they would have to contribute to health insurance for the first time, beginning in the next couple of years.

The changes will occur around September, according to the memo. Microsoft's shares closed down 0.9 percent at $25.52.

(Writing by Edwin Chan; Editing by Steve Orlofsky)

(Reporting by Bill Rigby)

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Comments (2)
Daethian wrote:
’sweeping pay rises’
I think you mean ‘raises’ but may an actual copy editor would be helpful.

Apr 21, 2011 2:42pm EDT  --  Report as abuse
AdamSmith wrote:
Bill Gates’ incessant lobbying, for 15 years now, to expand the H1B visa program, and his hiring of many thousands of engineers from the schools of India and other low-income nations of Asia and Africa, is coming back to haunt him.

The hordes of foreign engineers flooded the American market, driving American engineer wage rates down sharply. Which is what Gates wanted. But it had an unanticipated consequence. The collapsing wage rates for experienced American engineers caused a generation of American high school students to choose other occupations than engineering.

Engineering is a tough path in college. It takes a lot of work and sacrifice. American kids on that path saw the collapsing engineering wage rates, and said, Why should I kill myself in school only to barely earn a living when I become an engineer?

So American engineering schools have seen a sharp drop in the number of American kids wanting to be engineers, and it has greatly damaged the position of America in a competive world.

The H1B visa program has increased the profits of Microsoft over the short term, but in the long term it has almost destroyed a crucial segment of America’s middle class — its professional engineers.

Apr 22, 2011 1:29pm EDT  --  Report as abuse
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