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Microsoft docks Steve Ballmer's pay over Windows 8, Surface RT

CEO received nearly 80 percent of the total incentive award for which he was eligible in fiscal 2013. Issues plaguing the Windows division were to blame.

Mary Jo Foley
Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network.
Mary Jo Foley
2 min read
Steve Ballmer at Microsoft Build 2013 in June.
CEO Steve Ballmer at Microsoft Build 2013 in June. James Martin/CNET

Microsoft's annual proxy statement indicated that Microsoft CEO Steve Ballmer had his pay docked because of Windows division's lackluster performance in the past year.

Ballmer received $1.26 million in fiscal 2013 -- a base salary of $697,500 and a bonus of $550,000. Ballmer's "incentive plan award," calculated by the Microsoft board, was only 79 percent of the total for which he was eligible. Comparatively, for fiscal 2012, Ballmer received 91 percent of his eligible incentive award.

The fiscal 2013 proxy statement spelled out the reasons why Ballmer was docked:

"The company faced challenges due to weakness in the consumer PC market. While the launch of Windows 8 in October 2012 resulted in over 100 million licenses sold, the challenging PC market coupled with the significant product launch costs for Windows 8 and Surface resulted in an 18% decline in Windows Division operating income. Slower than anticipated sales of Surface RT devices and the decision to reduce prices to accelerate sales resulted in a $900 million inventory charge."

The latest proxy indicated that a number of other Microsoft managers received 100 percent of their incentive payments, including Chief Operating Officer Kevin Turner; Chief Financial Officer Amy Hood; Office President Kurt Delbene. Server and Tools chief Satya Nadella actually received 105 percent of his eligible award. Server & Tools was a consistently high-performing division for Microsoft during the past fiscal year, with the unit housing seven  $1 billion-plus businesses.

In fiscal 2012, the 3 percent decline in revenue for Windows and Windows Live; slower than planned progress in Online services; and the Windows division's failure to provide a browser choice screen on certain Windows PCs in Europe led to Ballmer failing to receive his full 100 percent last year. Former Windows President Steven Sinofsky also didn't get his full incentive award payment last year as a result of the European browser-ballot issue.

This story originally appeared as "Microsoft's Ballmer gets docked for Windows 8, Surface RT" on ZDNet.