Former Microsoft exec nets $15m

By Steven Musil

Microsoft has allowed former chief operating officer Rick Belluzzo to keep a $15m loan he received in 1999, even though he no longer has any connection with the company.

The loan to Belluzzo - who recently became chief executive officer at data storage firm Quantum - was made shortly after he joined the software giant in September 1999, according to Microsoft's annual report which was filed with the US Securities and Exchange Commission on Friday.

Microsoft called the loan an advance payment against the "minimum benefit" value of 3.5 million stock options Belluzzo was given in 1999 and 2000. The company reported Belluzzo forfeited the options and received a $350,000 bonus.

Additionally, the loan will be taxed as ordinary income, and Belluzzo will refund all applicable taxes to Microsoft, the filing said.

Personal loans to company executives like the one granted to Belluzzo became illegal on 30 July under the Sarbanes-Oxley Act, following several high-profile accounting and corporate governance scandals.

In one of the largest of many recent corporate bookkeeping scandals, WorldCom made a personal loan of $366m to former CEO Bernie Ebbers. Several former WorldCom executives have pleaded not guilty to charges related to telecommunications giant's $7.68bn in accounting misstatements.

E*Trade shareholders filed a lawsuit charging the company's board with gross mismanagement and breach of fiduciary duties after the company revealed that it had forgiven a $15m loan to CEO Christos Cotsakos.

Belluzzo left Microsoft in April to join Quantum. At Microsoft, Belluzzo was crowded out as the number three executive behind chairman Bill Gates and CEO Steve Ballmer. His tenure was marked by the lacklustre results of many of Microsoft's consumer projects, such as the plan to convince customers to pay for software on a subscription basis.

Steven Musil writes for News.com