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Microsoft's Ballmer Sees Bonus Sliced In Half

The company's board cut CEO Steve Ballmer's bonus due to Microsoft's loss of mobile phone market share and failure to match Apple's iPad.
Slideshow: 7 Biggest Microsoft Flops
(click image for larger view and for full photo gallery)
Slideshow: 7 Biggest Microsoft Flops
(click image for larger view and for full photo gallery)
Microsoft Chief Executive Steve Ballmer's annual bonus in the last fiscal year was cut in half, due mostly to the company's loss of share in the mobile phone market and its failure to match Apple's success with the iPad.

Ballmer received only a $670,000 bonus, despite the software maker reporting record sales of $62.5 billion for the fiscal year ending June 30, according to documents Microsoft filed Thursday with the Securities and Exchange Commission. The bonus was half of what Ballmer was entitled to, which is 200% of his base salary of $670,000.

In explaining Ballmer's compensation, the Microsoft board praised the CEO for the successful launches of Windows 7 and Office 2010, which were major sales drivers. In addition, Ballmer got kudos for his handling of the company's move toward cloud computing and its gains in the video game console market.

However, the company fell short in the mobile phone market, where it lost share, and failed "to pursue innovations to take advantage of new form factors." While the Apple iPad was not mentioned specifically, the term "new form factor" is what the industry uses to refer to the iPad and other devices either under development or already released in the emerging category of thin and light tablet computers. Apple leads the market so far, having sold 3.3 million iPads from April through June, the first three months it was available.

While Ballmer has said Windows-based tablets are coming soon, the majority of tablets that have been announced so far, besides the iPad, run Google's Android operating system.

In the mobile market, Microsoft in the summer dropped its Kin line of mobile phones, due to poor sales. The Kin was built and marketed to attract a younger, social networking-oriented audience. In killing the Kin, Microsoft said it choosing to focus "exclusively" on Window Phone 7, the company's new smartphone operating system scheduled to ship this year.

Microsoft's Windows Mobile OS has lost ground in the smartphone market to Android, Apple's iOS in the iPhone and Research in Motion's BlackBerry OS. Microsoft's software is ranked fourth in the U.S. market with less than a 12% share, according to research firm ComScore.

Ballmer at his own request no longer receives Microsoft stock, but is paid only his base salary and bonus. Ballmer currently owns 408 million shares, or 4.75% of the company, according to the Reuters news agency. Ballmer is worth $10 billion, making him the 16h richest person in the U.S., according to Forbes magazine.


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