Microsoft board: Ballmer 'Underpaid;' investors: fire him before we go broke

If it evaluated 'underpaid' Balllmer honestly board would make him pay to work there

Microsoft CEO Steve Ballmer – Microsoft employee No. 30, the 17 th richest person in the United States, No. 46 on Forbes’ list of global billionaires and the financial wizard whose acumen was able through hard work and brilliant technical visioneering to reduce the value of the industry’s most powerful company by nine percent in the three years since he took over as CEO – Ballmer is underpaid, according to Microsoft’s Board of Directors.

In papers filed with the SEC, Ballmer’s compensation was $1.38 million, two percent higher than 2010. Only 682,500 of that was salary; the rest was a bonus that was, admittedly, only half as much as he could have received if the board hadn't been giving him a slap on the wrist for being so slow to respond to tablets and smartphones and cloud computing that Microsoft remains an also-ran in all three (except smartphones, in which it's more of an "oh, are you still running?").

Ballmer actually got 100 percent of the bonus the Board could have given, but didn't get the 100 percent bonus-bonus it could also have given – the corporate financial equivalent of giving the teacher's pet an A+ for effort rather than an A++ on a test in which Stevie did not quite live up to his potential.

His performance – as CEO since 2000 under the supervision of Bill Gates and on his own since Gates' retirement in 2008 -- has been so relentlessly adequate that a surge in popularity for its iOS products caused Apple's stock price to surge far enough to unseat Microsoft as the most-valued technology company, despite sales that are a fraction of Microsoft's and even profit percentages that are lower than Microsoft's.

Microsoft's stock price, which dropped as far as 43 percent below its value when Gates retired, has barely risen back to where it was when the Emperor left, causing influential investors such as hedge fund manager David Einhorn started calling publicly for Ballmer's resignation in the spring – and almost certainly far earlier through more discreet channels.

Ballmer is paid significantly less than other high-tech CEOs who, according to the Board's analysis to the SEC, average $1.4 million in base salary and $4.5 million in cash bonus with the potential to increase that bonus to $14.4 million if they can bring their companies enough success to justify it.

Ballmer makes far less than the four other top executive officers at Microsoft – whose compensation ranges between $3.5 million and $9.3 million.

The board isn't making a case to raise his salary; it's explaining to the SEC why, despite believing Ballmer is "underpaid for his role and performance," it pays the boss such a pittance at Ballmer's own request and because "his personal wealth is tied directly to Microsoft's value."

Other tech-company CEOs have made the same choice, of course – ostentatiously, more as a way to signal they are already so rich they couldn't be bothered to cash any check a company board could pay, and so close to omnipotence that large bonuses would disappear in contrast with the increasing wealth they could reap simply by inflating the company's stock with one breath from their mighty lungs.

Steve Jobs' salary was $1 at Apple for a long time, by the way, not that his is the first name that comes to mind when the topic of narcissistic delusions of omnipotence come up.

Is Ballmer underpaid? In salary, compared to other execs, sure.

If his compensation really depended on the value he derives for the company, the board should probably be asking him to pay them – and a lot more than $600 grand per year.

Microsofties always professed to resent their reputation as the Evil Empire, but the degree to which customers publicly hated on the company while continuing to buy its products was always a good indication of how strong and stable its power really was.

Now, when sites like TechRepublic ask whether Google and Apple have taken over Microsoft's place in the Evil pantheon, it's taken as whimsical phenomenology, not subversive provocation. In its "who do you trust" poll on mobile technology, Microsoft didn't even show up as an option in a choice between Apple and Google.

As far back as 2007 – barely a year after Gates left day-to-day management of Evil to Ballmer – analysts were already asking overtly "Is Apple the new Microsoft?"

That's a pretty good indication the air was leaking out of Microsoft's balloon long before its board started justifying the low salary it pays Ballmer, and long before it took the drastic step of only giving him half as much in performance bonus as it could have – causing Ballmer to have to cut back his budget for laundering blue shirts sweated up during sales-meeting cheerleading sessions and switching from Premium to Standard grades of fuel for helicopter commutes to the office.

Microsoft's Board just wants the SEC to understand Ballmer's voluntary decision to sacrifice his own comfort for the benefit of stockholders (of which he is a significant percentage).

Read more of Kevin Fogarty's CoreIT blog and follow the latest IT news at ITworld. Follow Kevin on Twitter at @KevinFogarty. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

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