Microsoft dings Ballmer's bonus over Windows 8, Surface RT struggles
The penalty is equivalent to half the cost of a cup of coffee at McDonalds to the average American
Computerworld - Microsoft's board of directors reduced outgoing CEO Steve Ballmer's bonus for the 2013 fiscal year, citing poor performance of Windows 8 and the $900 million Surface RT write-off, according to a filing with the U.S. Securities and Exchange Commission.
The Redmond, Wash., company's proxy statement spelled out the salaries and bonuses of several of its top executives, including Ballmer, new Chief Financial Office Amy Hood and Chief Operating Officer Kevin Turner, as well as now-departed managers such as former CFO Peter Klein and Office chief Kurt DelBene.
Microsoft paid Ballmer $697,500 in salary and awarded him a $550,000 performance bonus, for a total of $1.26 million for fiscal year 2013.
The bonus was less than Ballmer could have earned.
"Our Board of Directors approved an Incentive Plan award of $550,000 which was 79% of Mr. Ballmer's target award," stated the proxy. One hundred percent of the target would have been $696,000.
The 79% was considerably lower than Ballmer's comparable number for the 2012 fiscal year, when he was granted a bonus representing 91% of his target.
Microsoft's board cited both company wins and losses under Ballmer's stewardship, but the latter included some failures that were the root of its bonus decision.
"While the launch of Windows 8 in October 2012 resulted in over 100 million licenses sold, the challenging PC market coupled with the significant product launch costs for Windows 8 and Surface resulted in an 18% decline in Windows Division operating income," the proxy noted. "Slower than anticipated sales of Surface RT devices and the decision to reduce prices to accelerate sales resulted in a $900 million inventory charge."
Some analysts have speculated that the $900 million write-off was the proverbial straw that broke the board's back, and triggered Ballmer's ouster. In an interview with the Wall Street Journal last week, however, John Thompson, the lead independent director and the head of the committee in charge of the search for a new chief executive, backed Ballmer's explanation for his sudden retirement: He did not want to remain in the job through the long course correction to a "devices-and-services" strategy.
The proxy statement's commentary on the strategy change, as well as the corporate reorganization announced in July, was Ballmer-neutral. "The company continued to make progress in its devices and services strategy," the filing read.
Last year, Ballmer's bonus was pegged at 91% of his target as the board ticked off several issues during that fiscal year, including a 3% decline in revenue for the Windows and Windows Live Division, and a fiasco where Microsoft failed to offer a browser choice screen to Windows 7 customers in the European Union.
The EU later slapped a $752 million fine on Microsoft for that oversight.
- Software Asset Management: Ensuring Today's Assets Today's trends like BYOD and SaaS are new and exciting in terms of how they will help make our jobs more productive but...
- Trends Shaping Software Management: 2014 Most IT executives recognize the relationship between mobile computing and worker productivity, and have long issued notebook computers and other mobile devices to...
- Software Asset Management: Pay Attention or Pay Up There is a wide range of options for managing software assets, from in-house solutions to the cloud to managed services providers. Read this...
- Are You Prepared for a Software Audit? Just the word "audit" is enough to make anyone shiver, and when it comes to a software audit, the reaction is no different....
- Transform Your IT Service Management Watch this webinar, to learn how EasyVista can increase IT productivity & efficiency and deliver streamlined & integrated IT Service & Asset Mgmt.
- Top 4 Digital Signage Fails Join RMG Networks for a look at four of the most common reasons digital signage fails in corporate businesses. Learn about strategies to... All Management White Papers | Webcasts