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10/12/2011
08:15 AM
Paul McDougall
Paul McDougall
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Who's Hot, And Not, At Microsoft

It's not as telling as those old Kremlin photos, but Microsoft's annual proxy filing shows whose stars are on the rise.

As a predictor of individuals' fortunes, Microsoft's annual proxy filing may not be as accurate as those old Kremlin photos in which Politburo members farthest from Khrushchev often "disappeared" the next year, but it does show whose stars are on the rise and who may be on the hot seat.

Khrushchev, er Steve Ballmer, received 100% of his bonus for fiscal year 2011, or $682,500, according to the SEC filing. When combined with his salary of $682,500, Ballmer took home a total of $1.365 million.

Must be doing a bang up job, right? It's not that simple. You'd think with all those engineers and mathematicians on the payroll Microsoft would know that nothing can really be larger than 100% of itself, with the exception of the effort expended by professional athletes, who always give a 110%.

But in Redmond speak, 100% is really 50%. Because Ballmer was actually eligible for a maximum bonus of $1.365 million. So why did the board knock him down by half?

[How does Microsoft grade itself right now on innovation? See The Tale of Ballmer's Bonus. ]

First, the good news--if you're Ballmer or a Microsoft shareholder. The CEO got "100%" of his incentive plan because of "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 the development of the next generation of Windows; [and] work toward the successful acquisition of Skype," the Oct 3rd filing said.

The board also made note of "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."

But the board also noted that Microsoft under Ballmer failed to make progress in some key areas in its past fiscal year, ended June 30--most notably in tablets and smartphones. Microsoft's market share in the latter category is less than 5%. It also lost ground in the OS market. Specifically, the board cited "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."

Still, Ballmer, who foregoes the equity portion of Microsoft's incentive program, presumably because he's already the company's second largest shareholder, walked away with an extra $682,500 in his pocket. It's nice to be CEO. But apparently it's a lot nicer to be chief operating officer, at least when it comes to Microsoft's bonus plan.

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DHAZEN000
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DHAZEN000,
User Rank: Apprentice
10/14/2011 | 5:13:39 PM
re: Who's Hot, And Not, At Microsoft
No way should an exec get a bonus if the owners (stockholders) are also not compensated!!
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