Poor Windows 8, Surface RT performance means pay cut for Ballmer
Microsoft CEO Steve Ballmer saw his pay docked this year as a result of the disappointing performance of the company's Windows Division over the past year.
The Microsoft head received $1.26 million in compensation for fiscal 2013, with $697,500 of that in base salary and $550,000 in bonuses. Ballmer's "incentive plan award" for 2013, which is calculated by the Microsoft board, was only 79 percent of the total he could have gotten, while in 2012, Cnet notes, the Microsoft chief received 91 percent of his eligible incentive award.
The reason for the pay dock: the continuing poor sales of devices running Windows 8 the spectacular failure of the company's Surface RT device. Microsoft's latest operating system has underperformed since its launch, and the firm's fiscal 2013 proxy statement points to those shortcomings.
The report cites "weakness in the consumer PC market," a continuing issue for Microsoft as consumers increasingly turn away from traditional PC form factors in favor of smartphones and tablets running iOS or Android. Microsoft has sold more than 100 million Windows 8 licenses since the platform's launch, but that is well below what the company had expected.
Adding to the Windows Division's woes, the Surface RT device Microsoft rolled out last year met with middling reviews and virtually nonexistent consumer demand. Microsoft eventually wrote down $900 million worth of unsold inventory. The company has since shown off new versions of its tablet devices, but the poor performance of the last generation still dragged on Ballmer's compensation.
All told, the sales woes for the PC market and product launch costs for Windows 8 and Surface resulted in an 18 percent decline in Windows Division operating income.
The report is not entirely negative regarding Ballmer, as it notes that "the Committee and Board believe Mr. Ballmer is underpaid for his role and performance." That feeling, though, was insufficient to earn the Microsoft chief his full incentive payment. A number of other Microsoft managers received 100 percent of their incentive payments, including COO Kevin Turner and CFO Amy Hood. The head of the Servers and Tools unit received 105 percent of his eligible award, as that division pulled in more than $7 billion.
Ballmer shocked the tech world some weeks ago by announcing that he will leave Microsoft within the next year, and the company's search for a successor is ongoing.
The Microsoft head received $1.26 million in compensation for fiscal 2013, with $697,500 of that in base salary and $550,000 in bonuses. Ballmer's "incentive plan award" for 2013, which is calculated by the Microsoft board, was only 79 percent of the total he could have gotten, while in 2012, Cnet notes, the Microsoft chief received 91 percent of his eligible incentive award.
The reason for the pay dock: the continuing poor sales of devices running Windows 8 the spectacular failure of the company's Surface RT device. Microsoft's latest operating system has underperformed since its launch, and the firm's fiscal 2013 proxy statement points to those shortcomings.
The report cites "weakness in the consumer PC market," a continuing issue for Microsoft as consumers increasingly turn away from traditional PC form factors in favor of smartphones and tablets running iOS or Android. Microsoft has sold more than 100 million Windows 8 licenses since the platform's launch, but that is well below what the company had expected.
Adding to the Windows Division's woes, the Surface RT device Microsoft rolled out last year met with middling reviews and virtually nonexistent consumer demand. Microsoft eventually wrote down $900 million worth of unsold inventory. The company has since shown off new versions of its tablet devices, but the poor performance of the last generation still dragged on Ballmer's compensation.
All told, the sales woes for the PC market and product launch costs for Windows 8 and Surface resulted in an 18 percent decline in Windows Division operating income.
The report is not entirely negative regarding Ballmer, as it notes that "the Committee and Board believe Mr. Ballmer is underpaid for his role and performance." That feeling, though, was insufficient to earn the Microsoft chief his full incentive payment. A number of other Microsoft managers received 100 percent of their incentive payments, including COO Kevin Turner and CFO Amy Hood. The head of the Servers and Tools unit received 105 percent of his eligible award, as that division pulled in more than $7 billion.
Ballmer shocked the tech world some weeks ago by announcing that he will leave Microsoft within the next year, and the company's search for a successor is ongoing.
Comments
Wow. I wish I could get 79-91% of my maximum bonus for putting out crap like Surface RT.
MS has been profitable every quarter except one for a large write off. I'm not sure what he did to make it better and what he didn't do to make it worse, but as you can see from my wording here I'm clearly not objective on the subject of Balmer as an executive.
Right?!
At that level, 'profitable every quarter' is not sufficient for a performance evaluation. If you do nothing at all, a company like MS would continue to be profitable for a long, long time.
Evaluation at that level is incremental - are profits increasing? Are they entering new markets? Are they doing better this year than last year? And, by all means, did avoid a massive write off for disastrous product launches?
The board messed up if he made that high a percentage of his maximum.
Ballmer's bonus is just a 'rounding error'; he's worth over $18 billion! It's his pride that will be hurt.
He and Gates between them could probably buy a controlling interest back in MS … and fire the Board.
They all deserve each other and oblivion for foisting garbage Windows and garbage Office and over 1 MILLION viruses (Symantec) on an innocent public.
Ballmer's bonus is just a 'rounding error'; he's worth over $18 billion! It's his pride that will be hurt.
He and Gates between them could probably buy a controlling interest back in MS … and fire the Board.
They all deserve each other and oblivion for foisting garbage Windows and garbage Office and over 1 MILLION viruses (Symantec) on an innocent public.
I know you THINK Ballmer and Gates could buy controlling interest, but they can't. Between the two, they hardly have enough liquid cash to buy that much stock. All of their wealth is tied up in stocks, etc, which they can't dump at market value, plus they would have a nice tax bill afterwards.
Profitable in all the wrong areas. Still living off the Windows/Office cow in this day and age is unacceptable.
Making a profit, yet they're nowhere in mobile. You can make a profit selling rubber dogshit and still be doing all the wrong things vis-a-vis the competition. MS completely shit the bed in mobile, and their core Win/PC biz is being slowly phased out. This is where all the profit-from-the-wrong-things has brought them: a gradual slide into irrelevance, amid leaner and meaner competition.
I'm trying to equate the $900 mill write off with the $1.26 mill payout and the word 'underpaid'. That's a pretty big screw up all round.
They really like how Surface 1 totally failed, but he is still willing to double-down and make the Surface 2.
"Ballmer shocked the tech world some weeks ago by announcing that he will leave Microsoft within the next year..."
Shouldn't that be "The tech world was shocked that the Microsoft board finally showed Ballmer the door after years of tolerating his complete denial of, and inability to lead in, the so-called 'post-PC' world."
In a world where performance=salary this guy would owe MS millions.
Folks, I understand that this is an Apple web site and that it is 'cool' to draw down the competition, but we're living in an alternate reality if we truly believe that Microsoft is not still a VERY profitable company capable of making people very rich. We can pretend Windows and Office are antiquated technologies, but simply saying it does not make it true. I love Apple, Windows Surface RT was a flop, and Ballmer is a buffoon but this thread is quite ridiculous, especially the poster that alludes to Ballmer apparently having an addiction to illegal drugs and 'small boys'.
This quote is written by somebody who simply doesn't understand, well, a bunch of simple business measurements:
Making a profit, yet they're nowhere in mobile. You can make a profit selling rubber dogshit and still be doing all the wrong things vis-a-vis the competition. MS completely shit the bed in mobile, and their core Win/PC biz is being slowly phased out. This is where all the profit-from-the-wrong-things has brought them: a gradual slide into irrelevance, amid leaner and meaner competition.
In this day and age (and for many years before) a profit is a profit. Period. Apple makes profits, too. Why is making a profit selling Rubber Dogshit "wrong" if rubber dogshit is what you make? In the world of business, it doesn't matter how make a profit...it simply is important that you do so. To somehow pretend that Microsoft's profit isn't as good as Apple's profit or to cheapen it by pretending that it was made selling products that are undesirable is to woefully and VERY apparently misunderstand the marketplace. Face facts: Not only is Microsoft making a profit on Windows and Office...they are sustaining a massive company with the two.
I'm a bit baffled as to how anyone who understands business, investor expectations and simple math can pretend that a profit based on products like Windows and Office are somehow invalidated by another companies successes or status in a specific market segment (such as mobile).
Microsoft's profit isn't as good as Apple's for two reasons: first, PCs are a dying industry. Second, Balmer had nothing to do with those profits; he merely inherited them from Gates.
Yes, currently Microsoft is turning a profit, but at the same time Balmer as CEO has cost them billions more profit.