Crocodile tears for Ballmer's dinged bonus

Microsoft CEO received 'only' 79 percent of his eligible bonus because of Windows 8/Surface RT foibles, but his bottom line still increased by $606 million

Microsoft's annual 14-A proxy statement appeared late Thursday on the SEC website. While the report largely contains reams of boring numbers and rehashes of details we've seen many times, the subject of Steve Ballmer's bonus has set several analysts' hearts atwitter. It ends up that Ballmer received a paltry $550,000 bonus for the fiscal year, a mere 79 percent of the $700,000 he could've received within the board's guidelines.

The reasons given for withholding $150,000 from the CEO's pay were elucidated quite specifically:

The award was based on his performance self-assessment and other relevant information considered by the independent members of the Board, including: Mr. Ballmer's performance against his individual commitments, the financial and operational performance of the company, and the operating income performance of the company relative to 25 large technology companies... The company faced challenges due to weakness in the consumer PC market. 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. Slower than anticipated sales of Surface RT devices and the decision to reduce prices to accelerate sales resulted in a $900 million inventory charge.

In addition, Ballmer received $697,500 in base pay, so his total pay of $1.25 million -- 11 percent shy of the $1.4 million he could've received with absolutely perfect performance.

While you and I might notice a $150,000 dock in our bonuses, but I don't think Ballmer's going to miss his. Why? According to the 14-A statement (page 10), Ballmer owns 333,252,990 shares of Microsoft stock. If you look back at last year's 14-A, you'll discover that he's neither bought nor sold -- nor been granted -- any other stock in the interim.

Last year on the day the 14-A was published, MSFT stock closed the day at $31.21. This year on the day the 14-A was published, MSFT closed at $33.03.

That little 5.8 percent increase in stock price boosted Ballmer's bottom line by a little over $606 million -- in one year.

So if you want to feel sorry for Ballmer's docked $150,000 performance bonus, go right ahead. But when it comes to stock price and increasing shareholder value  -- arguably Ballmer's No. 1 job -- he's done quite well this past year, wouldn't you say?

This story, "Crocodile tears for Ballmer's dinged bonus," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

Mobile Security Insider: iOS vs. Android vs. BlackBerry vs. Windows Phone
Recommended
Join the discussion
Be the first to comment on this article. Our Commenting Policies