Ballmer's bonus takes a hit due to Surface RT and Windows 8 performance
Microsoft CEO Steve Ballmer isn't getting his full bonus this year. In an annual proxy statement filed with the SEC, the software maker has revealed that Ballmer is receiving 79 percent of his total eligible "incentive plan award" in 2013. Previously, Ballmer received 91 percent of his eligible bonus. In the filing Microsoft makes it clear why Ballmer hasn't achieved 100 percent bonus: Surface RT and Windows 8.
"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."
Microsoft famously took a $900 million hit on Surface RT in its latest quarter, owing to poor sales of its first tablet hardware. Ballmer recently admitted Microsoft built too many Surface RTs, and the company lowered the price of them by 30 percent worldwide in an effort to boost sales. It now plans to introduce its new Surface 2 tablets later this month. While Microsoft revealed 100 million license sales for Windows 8 earlier this year, with the exception of a brief update on August activations, it has been suspiciously quiet on full figures ever since.
Ballmer still gets $1.26 million
CEO Steve Ballmer now plans to step down within the next 12 months, and Microsoft's board of directors are tasked with finding a replacement to execute the "One Microsoft" strategy. Ballmer bid a tearful farewell to Microsoft employees during his final company meeting as CEO. Set to Bill Medley and Jennifer Warnes' "I've had The Time of My Life," Ballmer danced, screamed, and cried his way through the final moments of his exit speech. While he may have only achieved 79 percent of his potential bonus, Ballmer will still receive a base salary of $697,500 and a bonus of $550,000 for 2013.