Ballmer’s Bonus Suffers As Windows Phone 7 Stalls

Microsoft’s ongoing difficulties trying to convince the world about Windows Phone 7 is hitting its boss in the pocket. CEO Steve Ballmer has failed to clinch his maximum bonus for the second year running.

The 55-year old executive was reportedly paid an annual salary of $682,500 (£442,995) for the last fiscal year. And according to Reuters, the Microsoft board took the decision to limit his bonus to $682,500, an amount equalling his annual salary.

Under his bonus scheme, Ballmer was eligible to receive between zero and double his salary.

Poor Steve

While most of us would be perfectly happy at taking home over $1.3 million (£843,000) for a year’s work, it is worth remembering that in the inflated world of the CEO pay packet, Steve Ballmer is actually one of the lowest-paid leaders of a major US company. His annual package also includes no stock options, and in the end his annual compensation package only rose 2 percent from last year to $1.38 million (£895,00) in total.

However before we all start feeling sorry for Steve, it is worth remembering that actually he is the world’s 33rd richest person (according to Forbes), with an estimated fortune of $14.5bn (£9.4bn), and he owns 3.95 percent of Microsoft.

So what was the reasoning for Microsoft’s board to be so miserly with poor old Steve’s bonus for the second year running?

Well the answer is that Microsoft is not exactly convincing the world and its critics that it has a viable answer to the mobile phone and tablet question.

Tablets And Smartphones

In this so called “post-PC” world (at least according to Apple’s Steve Jobs), Microsoft has struggled to field a credible response to the new forms of computing posed by the arrival of the smartphone, and then the tablet.

This were the reasons, according to Microsoft’s regulatory filing with the US Security and Exchange Commission. According to Reuters, Ballmer’s performance review for fiscal 2011 (ended 30 June) took into account lower than expected sales of Windows Phone 7 software and “the need for further progress in new form factors.”

Another concern apparently is the 2 percent dip in sales at its key Windows unit, which was in line with a slowdown in global personal computer sales. However many are concerned this signals Apple’s increasing dominance thanks to its iPad 2, and its ability to cannibalise PC sales.

Microsoft is of course pinning its hope on the forthcoming Windows 8 operating system, which is being heavily promoted by Microsoft’s marketing unit as the OS of choice for both desktop PCs and tablets.

Ballmer’s other headache concerns the smartphone environment. Microsoft has never looked like being a serious contender here with Windows Mobile and the Kin product line.

However the jury is still out on Windows Phone 7, which could start to gain traction in the market when Nokia launches its first WP7 handsets.