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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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