Microsoft's outgoing CEO Steve Ballmer's bonus pay was recently slashed in half due to the weak performance of Windows 8 and Windows Phone 8 devices. According to a proxy finding report, Microsoft said Steve Ballmer would only receive 39 percent of the total annual bonus he was entitled to, or a meager $550,000.
Microsoft singled out an 18 percent drop in the operating income of its Windows division due to slow sales of Windows 8 devices and a $900 million charge related to the disappoint sales of Surface tablet as reasons for giving Steve Ballmer a smaller cash award.
According to the proxy statement, "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 per cent 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 $900m inventory charge."
Per Microsoft's rules, Ballmer was eligible for $1.4 million in bonus cash; instead, he received 79 percent of his base salary.
Last year, Microsoft awarded Ballmer with 91 percent of his base salary as bonus. He was also entitled to a cash reward that is 200 percent of his pay, but that didn't happen due to the weakness in Windows department and Microsoft's Internet Unit.
The slash in bonus isn't likely to affect Ballmer's lifestyle, though. Forbes has ranked Ballmer no.21 in its latest list of richest Americans, with a net worth of $18 billion.
Microsoft entered late a market dominated by Apple and Google, and it did this twice. First, Microsoft launched Windows Phone back in 2010 after the iPhone and a host of Google Android devices was taking the market by storm. Then Microsoft did it again when it entered the tablet market with the Surface RT and Surface Pro, long after the launch of the iPad and Android tablets.
However, all hopes are not lost as the company recently launched the Surface 2 and Surface Pro 2 in hopes of kicking its device and services division into gear. Microsoft also bought Nokia's mobile hardware division, which is a clear sign the software giant is serious about being a hardware company.
