SEATTLE (AP) - Microsoft Corp. Chief Executive Officer Steve Ballmer received a pay package valued at about $1.35 million for fiscal 2008, a year in which the software maker's profit climbed despite the troubled U.S. economy.

Microsoft also said it would change the way it calculates bonuses and stock awards in fiscal 2009 and beyond.

Ballmer's compensation for the year ended June 30 amounts to a 5.6 percent raise. According to a regulatory filing Monday, he received $640,883 in salary and a $700,000 bonus, or 109 percent of his salary. Ballmer's bonus target was set at 100 percent of his salary and he was eligible for up to 200 percent.

Some technology companies spend millions on executive security, travel and other perquisites; by comparison, Microsoft looks very frugal. The software maker contributed $6,900 in matches to Ballmer's 401K retirement plan and gave him about $3,100 worth of life insurance, disability insurance and athletic club membership fees.

The CEO, who owns about 4.5 percent of Microsoft's shares, received no equity compensation. He didn't exercise any stock options or vest any stock awards during the year.

Ballmer's raise wasn't nearly as dramatic as company's own performance in the year. Microsoft's profit ballooned 26 percent to $17.7 billion.

In the filing, the company said Ballmer's package is not calculated using a formula. Rather, the board's compensation committee considers his past earnings, his status as a significant shareholder, the compensation given to other Microsoft executives and an evaluation of Ballmer's performance in the fiscal year that just ended.

Because Ballmer doesn't receive stock or options, his $1.35 million package is slim compared to those of CEOs at other companies of similar size. Oracle Corp.'s Larry Ellison, for example, received a pay package valued at $84.6 million for fiscal 2008, a 38 percent raise over the previous year.

The Associated Press' calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission.

For the current 2009 fiscal year, Microsoft said it will revamp the way cash bonuses and equity incentive compensation are calculated for its top 10 or so executives.

In 2008 and before, Microsoft linked executives' cash and stock awards to different sets of performance goals.

In 2009 and beyond, the company said the bonuses will be drawn from a pool with a maximum funding of 0.35 percent of Microsoft's operating income for the year. Under the new plan, which was first announced on Sept. 25, each executive's bonus or stock awards could be as high as $20 million, though no pay package has come close to reaching that level so far.

Microsoft explained the changes by saying it lets the company consider more factors in distributing bonuses and equity awards, and reward work that couldn't have been predicted when performance targets were set at the start of the year.

The new plan applies to stock and cash bonuses for Chief Financial Officer Chris Liddell; Chief Operating Officer Kevin Turner; Microsoft's top technology leaders, Ray Ozzie and Craig Mundie; General Counsel Brad Smith; Stephen Elop, the president of the business software division; Robbie Bach, president of the division that makes the Xbox 360 and Zune media player; Bob Muglia, a senior vice president of the server and tools division and Lisa Brummel, the company's top human resources executive.

Ballmer will continue to decline equity compensation. His bonus in 2009 will again be a maximum of 200 percent of his salary, then reassessed the following year.

The new plan could mean that more of the money Microsoft spends on executive compensation could be tax deductible, said David Wise, a senior consultant at the New Jersey-based management consultancy Hay Group.

Executive compensation that is not tied to objective performance metrics is only tax deductible up to $1 million.

By setting the size of the bonus pool to a percentage of operating income - an objective measure - Microsoft ensures that awards it dishes out from that pool are tax deductible, Wise said, assuming shareholders approve the new system at an annual meeting scheduled for Nov. 19.

Microsoft said in the SEC filing that under the old plan, it considered whether compensation would be tax deductible but that other priorities were more important in some cases.

"There has never been a more difficult environment for executive compensation, and shareholders are watching every dollar," Wise said. "This is an example of how companies are looking to button up their programs in the face of increasing shareholder pressure."