Already among the world’s richest individuals, former Microsoft CEO Steve Ballmer is set to receive nearly $1 billion in dividends from his former employer in 2024, as the tech giant increases its quarterly payouts to shareholders.
Microsoft’s 30th Employee in History to Earn $999.6 Million Just for His 4% Equity
The 67-year-old Ballmer, who was the 30th employee in Microsoft’s history when he joined in June 1980, currently holds 333.2 million shares of the company, representing a 4% equity stake.
With Microsoft’s decision to increase its quarterly dividend to 75 cents per share, amounting to $3 annually, Ballmer stands to earn $999.6 million in 2024 simply for his ownership, regardless of how the stock performs.
As Microsoft’s 30th hire in history, Ballmer has profited immensely from the company’s success over the past four decades. His upcoming dividend payout of just under $1 billion serves as a reminder of the vast wealth accumulated by Microsoft’s early employees.
From CEO to Multi-Billionaire Shareholder
Ballmer succeeded Microsoft co-founder Bill Gates as CEO in January 2000, after being with the company for nearly 20 years. He remained in the top role for 14 years before stepping down in February 2014 and handing over leadership to current CEO Satya Nadella.
Although Ballmer left his operational duties at Microsoft in 2014, he has retained his shares in the tech giant. His 4% stake (333.2 million shares), amassed over his 34 years with the company, has made him one of the world’s wealthiest individuals with a net worth estimated at over $112 billion.
As a multi-billionaire Microsoft shareholder, Ballmer exemplifies how long-term equity in a successful company can generate colossal personal wealth, even after an executive departs. His impending $1 billion dividend payday underscores this reality.
Microsoft’s Soaring Dividend Payments
Microsoft initiated dividend payments to shareholders in 2003 and has steadily increased the payouts over the past two decades. The upcoming increase to 75 cents quarterly, or $3 annually per share, will make 2024 the most lucrative year yet for shareholders like Ballmer.
At 75 cents quarterly, Microsoft’s annual dividend rate will be triple what it paid out in 2012. The company has richly rewarded loyal shareholders as profits have surged in recent years, with stock prices quadrupling over the past decade.
Rising dividend payouts have been a boon to long-term Microsoft investors like Ballmer. Based on his 333.2 million shares, his annual dividend earnings will nearly hit the $1 billion mark in 2024, providing a massive income stream in retirement for Microsoft’s former CEO.
Billions in Dividends Subject to Federal Income Tax
While Ballmer’s impending $999.6 million dividend windfall may seem staggering on its own, he will have to pay federal income taxes on the amount.
U.S. tax law requires individuals with taxable income exceeding $500,000 per year to pay a 20% rate on dividends. Based on Ballmer’s reported 2018 income of $656 million, his estimated 20% tax bill on the Microsoft dividends will be around $200 million.
Still, after paying the taxes, Ballmer will clear about $800 million in 2024 just from Microsoft’s dividend payments. For a retired tech executive who no longer works for Microsoft, earning nearly $1 billion annually in passive dividend income is quite a lucrative situation.
From CEO to Billionaire Team Owner
Since leaving Microsoft’s executive team, Ballmer has focused on managing his wealth and engaging in philanthropic causes. He remains on the Forbes billionaires list with an estimated net worth of over $90 billion.
Ballmer also became owner of the NBA’s Los Angeles Clippers in 2014 after outbidding competitors with a franchise-record $2 billion offer. As team owner, he serves as the Clippers’ chairman and represents the franchise on the NBA Board of Governors.
Additionally, Ballmer and his wife Connie co-founded the Ballmer Group in 2014, which focuses on philanthropic initiatives related to economic mobility, criminal justice reform, and addressing the opportunity gap.
For Steve Ballmer, life after Microsoft has kept him plenty busy with sports franchise ownership, philanthropy and managing his billions in Microsoft stock and dividends. The nearly $1 billion he stands to gain in 2024 demonstrates that his Microsoft equity was one of the most lucrative retirement plans any corporate executive could ask for.