Microsoft cuts bonuses for Silicon Valley workers

By Allison Linn, The Associated Press
Friday March 15, 2002

SEATTLE — Microsoft Corp.’s approximately 1,600 San Francisco Bay area employees are in for a rude surprise this summer — a smaller paycheck. 

Beginning Aug. 1, the software giant will cut the “geographic differential” it pays its Bay Area employees by 40 percent, from 25 percent of their base salaries to 15 percent, spokesman Jim Bak said Thursday. 

The 10 percentage-point cut, announced in an e-mail sent to workers Feb. 4, affects employees working in Mountain View, Foster City and San Francisco, the company said. 

The bonus pay was introduced in February 2000 as a way to lure and retain employees in what was then highly competitive market, Bak said. It was originally set at 15 percent, then increased to 25 percent in November 2000 as demand for tech workers grew. 

Now, with the market in a slump, Bak said the company decided it didn’t need to offer such a strong economic incentive. Voluntary attrition at Microsoft’s Bay Area units has dropped from nearly 30 percent in the company’s fiscal year 2001 to just over 9 percent in fiscal year 2002, he said. 

Microsoft also pays a 15 percent geographic differential to its employees in New York City, Bak said, and hasn’t announced plans to change that. 

Shares in Microsoft fell 88 cents to close at $61.22 each in trading Thursday on the Nasdaq stock market. 


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