Microsoft CEO Steve Ballmer has been dinged by the company’s board for Microsoft’s failure to comply with a European antitrust settlement, receiving less than his target bonus for 2012, according to documents made public by the company this afternoon.

The board’s review of Ballmer also notes areas of progress, including the completion of Windows 8 and unveiling of Microsoft Surface; along with negative developments such as a decline in Windows revenue and sluggish online growth.

Ballmer received a $620,000 bonus, or 91 percent of his target, the company says in its annual proxy filing. (Ballmer, already one of the largest Microsoft shareholders, doesn’t receive stock-based compensation.) Ballmer’s salary rose by $2,500, to $685,000 for the year.

The last time Ballmer received less than his target bonus was in 2009.

The browser problem arose when Microsoft failed to include a required “ballot” in Windows 7 for the better part of last year — a mandate designed to level the playing field between Internet Explorer and competing browser. Windows President Steven Sinofsky also was cited for the problem, receiving 90 percent of his target for incentive compensation, or $7.65 million in bonus and stock.

Ballmer and Sinofsky are ultimately the executives responsible for the situation, and the company appears to be making a public statement by cutting their bonuses. EU regulators can impose fines of up to 10 percent of annual revenue, or more than $7 billion based on Microsoft’s fiscal 2012 results, and a recent report said regulators were preparing a statement of objections against the company.

Here’s how the company’s proxy filing summarizes Ballmer’s performance over the past year.

For fiscal year 2012, the Compensation Committee recommended and the independent members of our Board of Directors approved an Incentive Plan award of $620,000, which was 91% of his target award. 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 operating income performance of the Company relative to 25 large technology companies (a group that includes most of our Technology Peers); success in substantially completing development of Windows 8 and the new Office suite; successful launch of SQL Server 2012 and System Center 2012 contributing to 12% growth in Server and Tools Business revenue; integration of Skype; progress in introducing new form factors such as Surface; strong operating expense discipline; modest growth in Windows Phone market share; the 3% decline in revenue for the Windows and Windows Live Division (1% after adjusting for the impact of the Windows Upgrade Offer); slower than planned progress in the Online Services Division; the Windows division failure to provide a browser choice screen on certain Windows PCs in Europe as required by its 2009 commitment with the European Commission; and overall solid business performance that produced $31.6 billion in cash flow from operations, an increase of 17%.


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  • guest

    Accountability, MS-style.

  • Guest

    I agree with the board: Mr. Ballmer did 91% of his job well this year. Selling 350 million PCs, upkeeping 50 million Xbox 360s, and growing into Windows Phone 7 and 8 with alacrity are all commendable. It’s unfortunate that Microsoft has to deal with a few EU bureaucrats here and there, but we hope that the EU will appreciate the infusion of U.S. cash as it struggles to remain solvent.

    • guest

      It’s out of a possible 200%. So 91 isn’t exactly nailing it. The rest is gibberish.

  • guest

    They sure showed him. Not!

  • guest

    “(a group that includes most of our Technology Peers)”

    Translation: we’ve selectively padded the list with a bunch of even slower moving laggards while leaving out leaders like Apple and Google, each of whom have been eating our lunch all decade and now pose the most direct threat to our future. Because what’s the value of statistics if you can’t make them lie for you?

    • Bob

      Those two were apparently included. But what weighting they or anyone else received isn’t clear. It might have just been Apple counts the same as Dell.

  • Guest

    He is doing the best job he can because of all the professional career managers at Microsoft that are slowing the company down. We have to hire more vendors to get our jobs done because we have to spend so much time managing our career objectives and 1on1 with managers.

    I just want to code again!

    • Mark

      The bureaucracy that has stifled MS’s ability to compete and innovate was largely built on Ballmer’s shift. I’m seriously astounded that people are still making excuses for this guy. In 2003, perhaps. But in 2012? Really?

      • Guest

        Nine years is a lot of time to work on coming up with better excuses!

  • ismail arslangiray

    Steve Balmer is simply is not the man for the job anymore. Technology by passed him. Microsoft needs a more geeky CEO that understand the trends. If you don’t believe me, go to University Village Shopping Center where both Apple and Microsoft do have stores. Microsoft Store has about 3-4 customers / lookers and Apple has almost 60-70 people inside. So, they need to make products to bring people in. Microsoft seriously look for a Steve Balmer replacement

    • Michael Hazell

      Microsoft also does not have popular products such as the iPod. Apple is good with that because they really were the “first” to push out MP3 players.

  • guest

    Microsoft is shrinking European-style: with a long, painful, drawn-out process. It’s like what’s happening in Spain, only for a company.

  • Aim Higher

    It’s disheartening to see how incredibly low the board has set expectations for Ballmer and the company. They seem to have given up on MS ever again being a leader. Instead that’s been conceded to the likes of Apple, Google, Facebook, and Amazon.

    This is a company that once set audacious goals like “a computer in every desk and in every home” and then proceeded to largely accomplish them. Now that’s been replaced with something devoid of any aspirations at all: “devices and services”. It’s like they’re admitting that disruption of their business is now inevitable and while they’re not exactly sure what they’ll be left with, it’ll probably be in that general bucket somewhere. Very sad.

    MS needs a tranfusion of new blood at the top. Stat.

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