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Gates accepts modest salary

Microsoft raked in more than $11.3 billion in revenues last year, but all told the CEO earned just over $542,000.

The world's richest man is underpaid--at least compared to some of his peers.

Microsoft chairman and chief executive Bill Gates, whose software company raked in more than $14.48 billion in revenues last year, earned just over $542,000 for fiscal 1998, according to a document filed today with the Securities and Exchange Commission.

That pales next to the $160 million total pay package for America Online CEO Stephen Case, whose No. 1 online service generated "just" $2.6 billion in revenues last year. Former Intel chief executive Andrew Grove earned more than $52 million in total compensation, leading the chipmaker to sales of more than $25 billion.

But don't cry for Bill Gates. See special report:
Fat cats The 42-year-old Microsoft founder still enjoys a net worth reportedly in excess of $50 billion. The fact that he owns nearly 21 percent of a company that continues to increase so handsomely in value allows him to work at a bargain price.

According to the SEC filing, Gates earned $542,297 in fiscal 1998, with $368,874 in salary and a $173,423 bonus. Gates, however, fell short of obtaining a full bonus, which was "tied to corporate revenue and profit goals" and could have been as high as 90 percent of his base salary, or nearly $332,000.

Meanwhile, Steve Ballmer, Microsoft's president, who also owns a sizable stake in the company, earned $547,827 in salary and bonus. Neither executive received stock options.

"Those are the kinds of numbers you'd expect for a company that saw $500 million or $1 billion in sales [per year], and Microsoft is significantly larger than that," said Steven Hall, managing director of Pearl, Meyer & Partners, an executive compensation consulting company in New York. Gates and Ballmer "are the biggest bargains in America for their shareholders."

Microsoft's chief operating officer Bob Herbold received $1.18 million in salary and bonuses last year, and another $3 million from selling stock. The officer who realized the most was group vice president of platforms and applications, Paul Maritz, who earned $521,463 in salary and bonuses and more than $13.45 million in stock sales.