Microsoft CEO Steve Ballmer. (Microsoft photo)

Microsoft’s annual proxy statement was just issued via the Securities and Exchange Commission. We’re still going through the fine print, but in one of the most closely watched numbers from the filing, CEO Steve Ballmer received an increase in pay to $682,500 for fiscal 2011, up about 2 percent, and a bonus of the same amount — bringing his total compensation to 1.365 million.

Under the company’s incentive plans, Ballmer had the potential to receive a bonus as large as twice his salary, if he had knocked it out of the park. But the the filing describes the bonus as “100% of his target award,” which is also what he received for fiscal 2010.

Ballmer’s bonus is paid in cash, not stock, because he already owns 3.95 percent of the company, second only to Bill Gates among individual shareholders. That helps make his overall compensation considerably less than the average of a peer group of CEOs from similar companies, according to the company.

“As the principal leader of Microsoft, Mr. Ballmer focuses on building our long-term success, and, as a significant shareholder, his personal wealth is tied directly to Microsoft’s value,” the proxy says. “While the Committee and the Board believe Mr. Ballmer is underpaid for his role and performance, they have accepted his request.”

Here’s how the board explained its reasoning this year, which serves as a gauge of the group’s take on the company, good and bad.

The award was based on his performance appraisal and other relevant information considered by the independent members of the Board, including: Mr. Ballmer’s performance against his individual commitments; the operating income performance of the Company relative to 25 large technology companies (a group that includes most of our Technology Peers); successful product launches including Kinect for Xbox and Office 365, enhancements to Windows Azure and Bing; continued progress positioning the company as a leader in the cloud and cloud-based infrastructure; key partnerships with Facebook and Nokia; significant progress in development of the next generation of Windows; work toward the successful acquisition of Skype; lower than expected initial sales of Windows Phone 7; the 2% decline in revenue for the Windows and Windows Live Division; the need for further progress in new form factors; and an overall strong financial year in which Microsoft reported record revenue of $69.9 billion, record operating income of $27.1 billion, and record earnings per share of $2.69 representing 12%, 13%, and 28% growth, respectively.

Update: Here’s the summary compensation table for all of Microsoft’s named executives, including Windows chief Steven Sinofsky and Office chief Kurt DelBene.

Comments

  • Guest

    Congratulations! I know that to a lot of angry poors, $1.365 million sounds like a lot of money. Indeed it is. Leading a successful, profitable, market-making company is hard work and Steve continues to drive Microsoft further into the future.

    In fact, Steve Ballmer makes less money for his success at Microsoft than did Leo Apotheker for his failure at HP, than did Carly Fiorina for driving HP into the ground, than did Kerry Killinger for destroying WaMu, and than did whoever destroyed General Motors four years ago.

    Thank you again, Steve, for leading the way.

    • Sheilasiaong

      Are you for real??!!  Any relations to Ballmer??!!

    • Sheilasiaong

      Are you for real??!!  Any relations to Ballmer??!!

  • themosquito

    The only way Microsoft will ever gain ground on Apple is to give Ballmer his walking papers and hire someone with vision to lead the company. As a MSFT shareholder, it’s time to look raise the sights and aim high. A few friends work from MSFT and they tell me that MSFT is a “mature” company and that is why their shares are flat. Sounds like they have a nice excuse given by upper management. I’m not buying it and neither should any of the share holders. The Board should have given Ballmer a pay cut.

    • Guest

      Ballmer has proved that he’s incapable of succeeding against Apple. In every head to head battle over the last decade Apple has either won soundly, or gained share.

      Ballmer’s replacement is going to have a difficult task on his hands trying to turn things around now. Apple just has too much momentum now and is too well positioned.

      Owning MS shares is a fool’s game. You will lose more every year on the stock than you gain in dividends. This year being another example.

  • Guest

    Congratulations Steve on again avoiding the consequences that your ongoing spectacular failures so richly deserve. Over the past
    3-4 years, you’ve lost MS’s decade head start in two of the most important
    markets for the future: mobile and tablets. As a result, not only is MS now unlikely to be a major player in either, but Windows and Office are showing signs of deterioration and are at risk too. If glassdoor is to be believed, you’ve lost the confidence of your employees. That’s always an impressive accomplishment. And of course you lost the market’s confidence a long time ago, which is why your stock has once again declined this year, while first Apple and now IBM have surpassed MS in value.

    Enjoy the bonus Steve. You’re underpaid! Although I suspect many employees and most shareholders wish you were underpaid somewhere else.

    • Guest

      Oh, Gary. If glassdoor is to be believed, EVERY COMPANY has lost the confidence of its employees. When you let every Internet troll pretend to be a bitter ex-Microsoftie, of course you’re going to get some sensational nonsense passed off as “experience.”

      Windows and Office remain strong with no credible competitors in the business world. Windows’s only threat at this point is Windows XP, an operating system so robust that it continues to enjoy widespread use 10 years after release. (By contrast, Apple stops supporting Mac OS X releases just 3 years after the first disc ships. Its software vendors quickly follow suit.)

      At this point I think Steve deserves his quite modest, by Fortune 500 standards, salary. What would you do differently were you in Steve’s position, Gary?

      • http://plus.google.com/100780849097348485078/posts Stynkfysh

        I think what the naysayers here are saying is that for all of Microsoft’s wealth and resources, they seem to be an also-ran in most everything they launch now a-days  – Office365 and other cloud services, Windows Phone 7, Bing services, etc.  Meanwhile, Google is constantly branching off in new and exciting areas.  Sure a significant number of things Google does fail, but Google is seen as leading tech into the future whereas Microsoft seems to be fitting themselves into the future that other’s are making.  This is not absolute, but it seems to be the general perception of Microsoft.  

        Also, Steve Ballmer seems to make a lot of bold and ultimately wrong declarations and predictions which lowers confidence in him – a lot.  I recall Bill Gates and Steve Jobs talking about about the future of computing, business strategy, etc. – and they were not only spot on, but they practically seemed mystical in their insight.  Steve Ballmer, not so much.

        If I were in Steve Ballmer’s position, I would employ Eric Schmitt’s 80%/20% plan where 20% of Microsoft’s time and resources are spent on new stuff that isn’t something that a major player is doing, even if much of it fails.  And if need-be, hire some young and energetic entrepreneurs, whether from direct hires, or through the acquisition of really fascinating start-ups.

        And then Microsoft should market itself as as an innovator…

        I could go on and on….

        Signed – a once stalwart MSFT tech geek.

        • Guest

          Things Google does that make money:
          – Advertising

          Things Microsoft does that make money:
          – Microsoft Windows
          – Microsoft Office
          – Xbox 360
          – MSN
          – Lots of business-to-business software products you’ve never heard of
          … and the list goes on.

          Being cool will earn you points with the trolls on Geekwire. Being successful at the products big businesses, and their fear of change, buy and love makes you Microsoft.

          Thank you, Steve, for continuing to win.

          • http://plus.google.com/100780849097348485078/posts Stynkfysh

            I understand that Google does not have the same revenue stream as Microsoft, but that does not make them non-competitors. You may call it geek coolness, I call it interest. Chrome has eroded Internet Explorer and entire municipalities and universities have adopted Google Apps which takes away from not only Office sales, but also the backed hardware and software to support them. And as far as relying on business based software, that same mentality is what has sunk RIMM. The fast and broad adoption of smart phones and now tablets are eroding Microsoft’s Windows platform in homes and is also bleeding into business. Bill Gates has said that the key to being successful in the tech world is controlling the standards (word, excel, windows, etc.). That control is waning. And I have personally installed and maintained many of the Microsoft platforms you think I am ignorant of. I actually like Microsoft and wish them a lot of success. I am just saying that they have issues that if not addressed aggressively, they are going to be relegated to the history books as one of the greatest companies of the past.

          • Guest

            Steve, pull yourself back from the little bubble of tech comments and face facts.

            Chrome remains a browser used by the few, not by the many. It forms the base of Chrome OS, an operating system so disastrous that Google’s own web site contains absolutely no mention of it. Certainly some alpha geeks have installed it on their mothers’ computers and feel that this constitutes “market share,” but it doesn’t. Internet Explorer still enjoys a commanding lead as Firefox, Chrome, Safari, Silk, Opera, Maxthon, and other also-ran browsers scramble for IE’s table scraps.

            Microsoft Office remains the de facto standard for office documents. Google Apps has proven to be effective for e-mail, but the JavaScript imitations of Word and Excel continue to lag about 20 years behind Microsoft’s compiled native applications. Again, some may feel good that they’ve installed this office suite, but true knowledge workers know that in the world of tools, Office is solid steel and Google Apps is plastic.

            Steve, please take a tour of some large companies. The world doesn’t revolve around the blatherings of online commentators; it revolves around real money paid to solve real problems. When the rubber meets the road, computer users stow their ChromeBooks and start Microsofting.

      • Guest

        Not true, Paul:

        http://www.glassdoor.com/GD/Best-Places-to-Work-LST_KQ0,19.htm?detailViewPageNumber=0

        First thing I’d do is stop pretending I’m winning when I’m really losing. Then I’d try and figure out why I’m spending the most money on R&D but being disrupted consistently by those spending among the least. I’d also try and understand why MS takes three years to do what others routinely accomplish in six months. That’s just a start, Paul. I hope I can depend on your vote when the time comes.

        • Guest

          I’ve read Glassdoor’s reviews and, frankly, I’m unimpressed. Glassdoor is to company reviews what Yelp is to restaurant reviews: you read what you want to hear, written by people who revel in writing scathing criticisms. I would sincerely doubt the integrity of any man who trusts the anonymous “reviews” on Glassdoor.

          • Guest

            Sorry you’re not a glassdoor fan, Paul. I only included the link because you said it showed all CEOs have lost the confidence of their employees. That’s incorrect.

            But Paul, what do you make of all the departures lately at Microsoft and their having to increase compensation to help with retention? If employees have confidence in your man Steve, shouldn’t they be staying because MS’s long promised resurgence is right around the corner?

          • Guest

            Gary,

            I can’t help all the men who are disenchanted with Microsoft. Engineers are frequently lazy and fickle, making mountains out of perceived molehills. One statistic you ought to research is the “recidivism rate.” Of every 10 men who leaves Microsoft to join another company, 7 return to Microsoft — including 3 within the coming year! I salute and support Steve Ballmer’s decision to retain employees not because employees were undervalued, but because employees were certainly going to return to Microsoft anyway.

            I’m sorry that you continue to misunderstand Glassdoor as a web site. Most companies which appear favorably on Glassdoor have either paid Glassdoor for placement or have offered incentives to place positive reviews. I myself have answered dozens of “freelance writer” postings on Craigslist and eLance asking me to write multiple positive reviews of a company. I’m not going to name names, but they’re companies you probably thought you should respect.

            Much love to you, Paul

  • The Tech bytes

    Congrats Steve.But dont you think keeping your performance in view the appraisal is not as good as it should be .May be Bill gates is thinking to foray in Social Networking area and thats why this increment came.

  • Anonymous

    This is like the coolest thing ever dude. Wow.
    real-privacy.int.tc

  • David B

    Wow. Sinovsky got less than the others? Why? Because he’s in charge of
    the ENGINE? I’m sure your increase in cup holders sales has nothing do
    with his work on Windows. For god’s sakes.

    • Guest

      Revenue probably factors fairly heavily in the overall bonus weighting. Windows sales were down. He’s president of Windows.

  • Anonymous

    He deserves it, but haters gonna hate.

  • Guest

    Every year the proxy has included a few more excuses and attempted justifications aimed at keeping shareholder focus away from the stock’s performance. But this one is a magnum opus of obfuscation.

    The simple truth is this: executives, supported by the board, have voted themselves and employees a pay raise while shareholders have again lost money.

    • Mark

      Yeah, I think the employee one was probably required and therefore justified. But the executive one after a series of competitive disappointments and another losing year for the stock kind of rankles.

  • Guest

    I love the timing: Steve gets a pay increase while Zune, another one of his failed ventures,  is discontinued.

    • Guest

      Zune is a service. They’re simply packaging it on new hardware.

      • Guest

        Uh huh. What you mean to say is Zune failed and MS is taking what it can from the loss.

        • Guest

          Zune is a service that continues to rank among the top 5 music consumption venues in America. That the Zune device is no longer sold is irrelevant.

          • Guest

            What are you, Frank Shaw’s assistant?  The device failed. Billiions were lost. Zune has become a verb for failure, though it has been surpassed by Kin. And all that remains is a service, which is nowhere on the world stage and even in the US isn’t in the top 3. And still you claim success?

          • Guest

            Who’s Frank Shaw?

            Zune is a service. Devices are one way to offer that service. Millions of phones, Xbox 360 consoles, and PCs also support that service.

            Apple no longer sells iPods in the numbers it did 5 years ago. By your logic, iPod is also a failure.

            Thank you, Microsoft, for continuing to win.

      • Guest

        Uh huh. What you mean to say is Zune failed and MS is taking what it can from the loss.

  • Mike

    Nasdaq’s return over the past 5 years = ~12%,  MSFT’s return during same period = -9%…  in other words under Ballmer has under performed the general market by over 20%.  How can anyone who runs a company to such a massive under-achievement be considered underpaid?  This is nonsense… and the board which came to the conclusion that such a huge under-achiever is “underpaid” must be incompetent as well.

    • Guest

      Imagine how much worse it would have been if they hadn’t done all the buybacks.

  • http://profiles.google.com/ee2718 admin 1

    The question that needs to be asked is who in Microsoft would be able to provide this kind of intelligent leadership of Ballmer is replaced?
    http://www.youtube.com/watch?v=wvsboPUjrGc
    http://www.youtube.com/watch?v=Vhh_GeBPOhs&feature=related

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