Software giant Microsoft (MSFT +0.93%) has just filed its annual proxy statement, inviting all shareholders to the company's annual meeting in November, among other things. Netflix (NFLX 0.48%) CEO Reed Hastings is also stepping down from Microsoft's board and will not seek reelection, after over five years of service. That will free up some of Hastings' time to focus on his own company.
Executive compensation is a favorite Fool topic, so let's see how much bacon Mr. Softy's management brought home last year. Steve Ballmer took home less cash compensation this year, while overall he remains modestly paid relative to CEOs of other tech giants. This is largely due to his long-standing request that he receive no equity compensation -- he already has plenty of equity, but more on that later -- which actually means many of his subordinates receive higher compensation.
Cash is king
The cash bonus that Ballmer brought home this year was 9% lower than last year, in part because the core Windows division saw sales fall 3% (only down 1% after adjusting for deferred revenue related to the Windows Upgrade Offer). The "slower than planned progress" in the online services division and failing to offer browser choices on Windows PCs sold in Europe as required by a 2009 antitrust investigation by the European Commission were also contributing factors.
|
Year |
Salary |
Bonus |
|---|---|---|
|
2012 |
$685,000 |
$620,000 |
|
2011 |
$682,500 |
$682,500 |
|
2010 |
$670,000 |
$670,000 |
Source: Proxy statement.
Windows sales have been sluggish, which is in line with the broader PC market. Microsoft estimates that PC unit growth last year was between 2% and 4%, while OEM license unit growth was down 1%. Of course, the "slower than planned progress" in the online services division refers to the botched acquisition of aQuantive in 2007. Microsoft had hoped to compete with Google (GOOG 0.36%) in the online ad market.
That decision ended up costing shareholders $6.2 billion, which evaporated in a poof of goodwill impairments and writedowns, yet Ballmer is only being set back by about $62,000 -- or 0.001% what it cost shareholders.
How Ballmer stacks up
Here's his total compensation relative to the rest of the management team:
|
Name |
Position |
Total 2012 Compensation |
|---|---|---|
|
Steve Ballmer |
CEO |
$1.3 million |
|
Peter Klein |
CFO |
$5.1 million |
|
Kurt DelBene |
President, Microsoft Office division |
$7.9 million |
|
Steven Sinofsky |
President, Windows and Windows Live division |
$8.6 million |
|
Kevin Turner |
COO |
$10.7 million |
Source: Proxy statement.
In comparison, Apple (AAPL +0.80%) CEO Tim Cook enjoyed total compensation last fiscal year of $378 million, although the vast majority of that figure was related to the 1 million restricted stock units he received upon inheriting that title. In strictly cash terms, Cook's salary was $900,000, less than Ballmer's $1.3 million.
However, Ballmer blows Cook out of the water when it comes to his holdings, stake in the company, and overall net worth.
|
Name |
Equity Holdings |
Percent of Common Stock Held |
Current Value |
|---|---|---|---|
|
Steve Ballmer |
333.25 million shares |
4% |
$9.74 billion |
|
Tim Cook |
1.38 million shares |
Less than 1% |
$890 million |
Source: Proxy statements. Cook's holdings are as of Apple's proxy statement filed in January and include unvested restricted stock units.
Ballmer's sizable stake also means he earns over $730,000 per day in dividends from the software giant, which tops his annual compensation in just two days. Apple just recently resumed its dividend after a 17-year hiatus, and while the company does pay out to unvested restricted stock units, Cook has graciously declined to have his large RSU holdings included. That translates into Cook voluntarily forgoing about $75 million per year -- or about $200,000 per day.
Ballmer may be bringing home less bacon this year as compensation, but I wouldn't sweat too much about him being able to pay his electric bill.
