Microsoft Execs Got Compensation Axed, as Ballmer Touts "The New Efficiency" (Which Sounds Painful!)
BoomTown happens to be in the Seattle area today, deep in the heart of Microsoft territory, which apparently is now living in a state of “new normal” according to a missive by the software giant’s CEO, Steve Ballmer.
Well, it all looks the same to me, but in an “executive e-mail” post yesterday titled “The New Efficiency,” Ballmer has continued to stress a theme he has been sounding since earlier this year about how the entire business ecosystem has to reset itself.
Of course, the “new efficiency” is also the new buzzword around the upcoming launch of Windows 7 and part of an event Microsoft had in San Francisco yesterday, as well as a Web site.
Now, that’s efficient!
Wrote Ballmer in the long post:
“So what is the nature of this shift? After years of economic expansion fueled by unrealistic rates of consumption and unsustainable levels of private debt, the global economy has reset at a lower baseline level of activity. Today, people borrow less, save more, and spend with much greater caution.
“This is the new normal and it will be with us for some time to come. The issue now is how to respond.”
At the same time, in its proxy filing with the Securities and Exchange Commission in advance of its Nov. 19 annual meeting, Microsoft (MSFT) also revealed that the direct compensation of its top execs had been cut rather significantly in 2009 compared to 2008, even though the figures are still large to most average people.
Previously, Microsoft had announced that it had frozen merit-based raises for these execs.
Noted the proxy:
“Reflecting the company’s performance during the severe economic downturn, our executive officers, taken as a group, received Incentive Plan awards equal to 77% of their target awards and 29% lower than the comparable cash bonus and stock awards for fiscal year 2008.”
This was mostly due to declines in the “fair market value of the stock awards at grant,” which Microsoft tried to compensate for in a small way, mostly via increased cash incentive payments.
Ballmer, for example, took in $1.265 million compared to $1.34 before, while COO Kevin Turner’s take-home went from $8.6 million to $5.4 million.
And CFO Chris Liddell–who has been sounding the economic alarm at Microsoft over the last year as its results have weakened, but in a jauntily charming Kiwi accent–took in $3.5 million, down from a previous $4.8 million.
Said the filing about the exec haircuts, which you can read about in detail here:
“In each case, financial results were less than expected due to the impact of worldwide economic conditions on our business. As a result, the Incentive Plan awards to our named executive officers for fiscal year 2009 were below both the target level for their awards and their actual fiscal year 2008 incentive compensation awards.”
Pretty glum overall, much like the rainy winter-is-coming weather that has arrived here in the Pacific Northwest.
Still, in his post–in which he touts the upcoming Windows 7 and other Microsoft products as helpers to ease the economic pain, natch–Ballmer (pictured here at a recent analysts meeting) noted the silver lining in the dark clouds:
“I’m optimistic because I believe we are entering a period of technology-driven transformation that will see a surge in productivity and a flowering of innovation.”
Until then, apparently, as Ballmer also wrote: “With less, do more.”