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Mobile woes slice Ballmer's bonus in half

The Kin phone was a flop, which put a hurt on the Microsoft's CEO bonus check--that, along with shortcomings in tackling "new form factors" as the iPad conquered the tablet market.

The bonus check for Microsoft CEO Steve Ballmer was a little light this year. Microsoft CEO Steve Ballmer

Microsoft CEO Steve Ballmer is only getting half of the bonus for which he's eligible this year, due to issues his company has faced competing in the mobile market.

According to a Definitive Proxy Statement Microsoft filed yesterday with the Securities and Exchange Commission, Ballmer will receive a $670,000 bonus for his work during the company's 2010 fiscal year. That figure, which was approved by Microsoft's board of directors, is equal to 100 percent of his 2010 base salary. Although $670,000 is nothing to sneeze at, Ballmer was eligible to receive up to 200 percent of his base salary from the board.

Microsoft's board cited the company's $24.1 billion operating income, Ballmer's ability to manage expenses, and the successful launch of several products, including Windows 7, Office 2010, and Bing, as reasons for why the CEO deserved the bonus this year.

But the board also cited some issues with Ballmer's management in recent months--the company's fiscal year runs from July to June. It said that "the unsuccessful launch of the Kin phone; loss of market share in the company's mobile phone business; and the need for the Company to pursue innovations to take advantage of new form factors" also factored into its compensation decision.

Although Microsoft didn't specify what "new form factors" the company has failed to pursue, it's possible that it was talking about tablets. Ballmer announced several Windows-based tablets at CES in January, but it has been Apple's iPad that has captured a significant portion of that space. Microsoft, a company that has been touting the advantage of tablets for years, has yet to make a mark on that market.

Whether the 2011 fiscal year will be better for Microsoft (and Ballmer) remains to be seen. Many of the issues the board has seen with the company, including its declining mobile business, could be addressed with the launch of Windows Phone 7 later this year. And new Windows 7-based tablets are in the offing. But those devices will be entering markets with entrenched competitors. And it could be difficult for Microsoft to overcome those challenges in the near-term.