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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.

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