After 2 years of 22%-plus increases, top Microsoft execs' comp fell in FY 2013
It's more in sync with the change in company's operating income than in 2011-12
Computerworld - Compensation awarded to the top five executives at Microsoft, including current CEO Steve Ballmer, fell in fiscal year 2013, the first time in the last four years that it's declined, according to a filing with the U.S. Securities & Exchange Commission (SEC).
In the proxy statement Microsoft filed with the SEC last month in anticipation of the shareholders meeting slated for tomorrow, the Redmond, Wash. company provided data on the total direct compensation for Ballmer and the four highest-paid executives below him for the years 2009-2013.
The total direct compensation -- salary, cash bonuses and stock awards -- in 2013 for the five was $36 million, for an average of $7.2 million each, down 3.7% from the year before.
Although Microsoft says it does not directly tie executive compensation to "any specific set of metrics," in the proxy statement the company lauded its calibration of compensation with the firm's performance. "The relationship between total direct compensation and key financial results demonstrates the alignment we have established between pay and business performance," the proxy stated.
To illustrate that, Microsoft compared compensation with its operating income. In fiscal year 2013, operating income dropped to 27 billion, or 5.4% lower than the year before.
The difference in the year-over-year movement of compensation and operating income in 2013 -- the former down 3.7%, the latter off 5.4% -- was much smaller than in the previous two years, when compensation climbed significantly faster than did operating income.
In fiscal years 2011 and 2012, Microsoft's operating income rose 12.7% and 4.9%, respectively. During those same years, however, direct compensation to Ballmer and his four highest-paid underlings jumped 23.1% and 22%.
In 2012, direct compensation costs climbed more than four times faster than did operating income.
Shareholders do not vote on executive compensation, although they must approve changes in how that compensation is calculated. One of the proposals before stockholders tomorrow will ask them to okay performance criteria used in the company's incentive plan.
That plan has been amended to raise the annual maximum amounts for each designated executive from $20 million to no more than 20 million shares for stock options or stock appreciation rights, and 5 million shares for stock awards.
Cash awards are also on the change docket, with those to be limited to the value of 5 million shares at the end of a fiscal year.
"The limits on cash awards are raised to the same level as for stock awards, to give the [Compensation] Committee greater flexibility in making cash awards in a variety of situations, including new hire awards," Microsoft said in the proxy statement.
Microsoft will host its annual shareholders meeting tomorrow in Bellevue Wash., starting at 8 a.m. PT (11 a.m. ET). The company will webcast the event.
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is firstname.lastname@example.org.
- How to sign up for Microsoft's restored security alert email service
- What about Windows, Mr. Nadella?
- Big changes and possible cuts prompt Microsoft to publicly air Nadella memo
- Nadella dumps Ballmer's 'devices and services,' coins his own strategy
- Want credit for June's Exchange blackout? File a claim
- Microsoft trolls for Office beta testers
- Critics blast Microsoft's takedown of No-IP domains
- Microsoft turns cloud storage into Office 365 feature
- Microsoft sneak peeks future IE with dev channel
- Outlook Web App goes native on Android
Read more about Management in Computerworld's Management Topic Center.
- Meet Business Demands and Drive IT Innovation Your IT organization plays a strategic role in business operations. What new solutions and offerings could you create if you had an agile,...
- British Airways Case Study British Airways increases scalability, reliability, flexibility and performance while building on its IT infrastructure using Red Hat Enterprise Virtualization.
- 3 Keys to Secure BYOD Deployment The new Bring-Your-Own-Device (BYOD) environment presents challenges for IT managers and business leaders. This paper discusses how IT managers can address those challenges,...
- Creating a Video Collaboration Strategy: Four Mistakes Mid-Market Companies Make and How to Avoid Them This Cisco-sponsored whitepaper from AVI-SPL shares key insights from Cisco's and AVI-SPL's teams of video collaboration integration experts gained through hundreds of deployments...
- 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...
- Symantec NetBackup Appliances: Key Factors in Modernizing Backup and Recovery This white paper outlines a structured approach to assessing the advantages and requirements of the PBBA model, and in particular the unique capabilities... All Management White Papers | Webcasts
Computerworld has launched its annual search for outstanding IT leaders who align technology with business goals. Nominate a top IT executive for the 2015 Premier 100 IT Leaders awards now through July 18.