Microsoft Board Gives ''Underpaid'' Ballmer a 2% Raise

Microsoft CEO Steve Ballmer received a bonus of $682,500 for the company's most recent fiscal year, half of the maximum possible bonus he could have received. The news was revealed in a Microsoft filing with the U.S. Securities and Exchange Commission. Ballmer is elligible to receive a maximum bonus of double his current base salary. His bonus, combined with his $685,000 base salary, brings the CEO's total compensation to $1.38 million, significantly less than that of his peers. Microsoft said in the filing that its board believes Ballmer is "underpaid for his role and performance" when compared to his peers. Ballmer refuses to accept any stock compensation, which would boost his compensation by a considerable amount.

"For fiscal year 2011, the Compensation Committee recommended and the independent members of our Board of Directors approved an Incentive Plan award of $682,500, which was 100% of [Ballmer's] target award," Microsoft said.

The company goes on to explain that the bonus was based on his performance appraisal as well as the operating income of the company relative to 25 large technology companies; successful product launches (including Kinect for Xbox, Office 365, enhancements to Windows Azure and Bing), key partnerships with Facebook and Nokia, significant progress in development of Windows 8, and work towards the acquisition of Skype, among other things. However, Microsoft also took into account some of Ballmer's failures, including lower than expected initial sales of Windows Phone 7 and the 2% decline in revenue for the Windows and Windows Live Division.

Redmond puts the average salary of Ballmer's peers at $15.8 million while Ballmer's compensation, had he received the maximum possible bonuses, would only amount to just under $2.05 million. In fiscal 2011, Ballmer's salary increased 2.2% to $685,000. According to Reuters, Ballmer's 3.95 percent of Microsoft shares gives him a personal fortune of $14.5 billion. 

As far as other Microsoft executives are concerned, Steven Sinofsky, President of the Windows Division, got a 0.8% raise, bringing him up to $650,000, while Corporate VP and CFO Peter Klein saw his pay increased 6% (to $530,000) and COO Kevin Turner was awarded a 16.3% increase (to $750,000), both adjustments made to more closely reflect pay of comparable positions in their peer groups. Last but not least, the salary of Kurt DelBene, President of the MS Office division, was established at $630,000 in his first year as an executive officer.