Microsoft executive pay: CEO Ballmer and President Sinofsky dinged over browser-ballot issue

The salaries and incentive awards for Microsoft's CEO and some of its top executives are public. Redmond's European browser-ballot problem didn't sit well with the evaluation committee.
Written by Mary Jo Foley, Senior Contributing Editor

It's interesting to see how Microsoft evaluates and pays its top executives. The latest Proxy statement for Microsoft's fiscal 2012, which came out today, October 9 in advance of the annual shareholder meeting on November 28, shines a good light on this.

The statement includes detailed information on how its top "named executive officers" were graded and compensated, per Microsoft's review process.

Here's this year's comparative compensation chart from the proxy:


CEO Steve Ballmer received an "incentive plan award" of $620,000 for fiscal 2012, which was 91 percent of his eligible target award. Ballmer seemed to have done well, according to the board's assessment, as measured by operating income of Microsoft vs other large tech companies; completion of the development of Windows 8 and Office Next/2013; the growth of the Server and Tools business; the integration of Skype; "modest growth" in Windows Phone; and the introduction of Surface.

Where he fell short, according to the Proxy: "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."

Windows President Steven Sinofsky received 90 percent, or $7.65 million, of his possible incentive award, according to the Proxy. The board liked the completion of Windows 8; the introduction of the Surface; Windows 7 enterprise adoption; and growth in IE market share. But it wasn't happy about the European browser-ballot issue.

Other "named executives" include Kevin Turner, Microsoft's Chief Operating Officer, who received a $12 million bonus, or 120 percent of target. Turner is basically in charge of Microsoft's enterprise/business initiatives, and enterprise is what continues to fuel Microsoft.

Kurt DelBene, the President of the Microsoft Business Division (home of Office), received a bonus of $9.06 million, or 125 percent of his target. The board called out as a big plus the fact that DelBene was a "key contributor to the strategy that led to pursuing the Yammer acquisition."

Chief Financial Officer Peter Klein received an incentive award of $4.75 million, or 100 percent of the eligible total.

Microsoft's top executives receive 15 percent or less of their compression in the form of their base salaries. Ballmer, at his own request, gets no equity. Ballmer's salary for fiscal 2012 remained unchanged at $685,000, and his total compensation for fiscal 2012 was $1.32 million. The mostly highly paid exec was Turner, at $10,68 million in total compensaion. Sinofsky received $8.58 million; DelBene got $7.91 million; and Klein came in at $5.11 million.

Next year, Microsoft plans to measure things a bit differently, with less of an emphasis on the performance of Microsoft's five individualized business groups, the Proxy notes. "For 2013, the focus of awards under the Plan will shift from performance ofseparate business groups to a combination of business group and company-wide performance. This shift aligns with our overall business strategy to provide integrated product and service offerings, and this requires deeper cross-organization collaboration."

In related news, there will be no Microsoft Financial Analyst Meeting (FAM) this year. Microsoft officials are relying on product launches as the new venues for communicating with Wall Street analysts regarding the company's strategic priorities and direction.

One more thing: Reed Hastings, CEO of Netflix, has decided not to seek renewal of his Microsoft board seat.

Editorial standards