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Ballmer's Successor Likely To Have a Bigger Paycheck

Steve Ballmer's replacement as Microsoft CEO is likely to take home a much bigger annual paycheck.

Ballmer, who has been CEO since 2000 and was under pressure to leave from activist investors, announced in August that he would retire within the next 12 months. 

On Friday, Microsoft posted its 2013 proxy statement, and there was some media attention paid to the relative meagerness of Ballmer's bonus. He earned $1.26 million for the year, which consisted of a base salary of $697,500 and a bonus worth 79 percent of that at $550,000.

On a percentage basis, it was the lowest of the bonus payouts to named executive officers in the statement. In explaining Ballmer's bonus, the proxy statement balanced record revenues against the 18 percent decline in Windows operating division revenue and the $900 million Surface RT inventory charge.

That aside, the proxy statement makes clear that the Compensation Committee of the Microsoft Board of Directors believes that Ballmer, by his own request, is severely underpaid.

A chart labeled "CEO pay comparison" shows Ballmer's maximum compensation could have been $2.1 million, compared with a "Dow 30 and Technology Peer Group (average)" of $16 million.

[Click on image for larger view.] The "CEO pay comparison" chart from Microsoft's 2013 proxy statement.

"Consistent with longstanding practice and his request, Mr. Ballmer does not participate in the equity component of the Incentive Plan. His award is payable entirely in cash, and is correspondingly smaller than those made to the other Named Executive Officers," the proxy statement read. "As the principal leader of Microsoft, Mr. Ballmer focuses on building our long-term success, and, as one of our largest shareholders, his personal wealth is tied directly to Microsoft's value. While the Committee and the Board believe Mr. Ballmer is underpaid for his role and performance, they have accepted his request."

Ballmer owned 3.99 percent of all common shares of Microsoft stock as of Sept. 13.

The other named executive officers listed in the proxy statement's 2013 compensation tables all took home much higher pay packages (mostly in stock awards):

  • Kevin Turner, COO, $10.4 million
  • Satya Nadella, president, Server and Tools Business, $7.7 million
  • Kurt DelBene, president, Microsoft Office Division, $7.6 million
  • Amy Hood, CFO, $7.5 million
  • Peter Klein, former CFO, $4.1 million

Posted by Scott Bekker on October 07, 2013 at 8:53 AM