Steve Ballmer, former CEO of Microsoft, is set to collect $1 billion in dividends from the tech giant in 2024. The amount comes after Microsoft increased its quarterly dividend payout to 75 cents per share or $3 per share annually. As of 2014, Ballmer owned 333.2 million shares, equivalent to a 4% stake in the company.
The dividend income is independent of Microsoft’s stock performance, meaning that Ballmer will receive the amount regardless of how the company performs in the stock market. However, the company’s board of directors could choose to reduce dividends, which does not seem likely given that the payout has increased steadily since 2003 when Microsoft began paying out dividends to shareholders.
The payout means that Ballmer would join an elite group of individuals who collect billions in dividends. Warren Buffet’s Berkshire Hathaway is said to be on course to collect $6 billion in annual dividends, including from stocks such as Chevron, Bank of America, Apple, Coca-Cola, Kraft Heinz, and American Express.
But for Ballmer and many of these wealthy investors, the scale of their payout means that they will also pay a significant amount of tax. Ballmer reported a taxable income of $656 million to the IRS in 2018, and as such, he will be subject to the 20% tax on dividends for individuals earning a taxable income of $500,000 or more. This means that he is set to pay close to $200 million in taxes on the Microsoft dividends he will collect.
Despite the huge amount of wealth involved, Ballmer had not commented publicly on the news.
Microsoft had not released a statement either, but the company is known for using shareholder dividends as a way to return value to investors.
