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Print 34 comment(s) - last by The Raven.. on Oct 4 at 5:29 PM


Kin was an epic fail after only two months on the market  (Source: Microsoft)
Bonus was half what it could have been

There have been many epic failures in the tech world over the years. One of the most recent failures came from Microsoft in the form of the Kin mobile phones. Consumers stayed away from the Kin in droves and Microsoft quickly pulled the plug.

“You've got to be bold, you've got to look forward and you've got to stay focused,” noted Microsoft CEO Steve Ballmer in a recent interview. “Kin was neither -- with 20-20 hindsight -- bold enough relative to where the market's going, and it just defocused activity from Windows Phone."

Ballmer may have piloted Microsoft to its best year ever, but the missteps by the company cost Ballmer. Ballmer reportedly made his yearly bonus, but the bonus was half what it could have been.

Ballmer received a bonus equal to his entire yearly salary amounting to $670,000. That is certainly a massive bonus by most accounts. However, the proxy filing by Microsoft cited the reasons for Ballmer not getting his full bonus were "unsuccessful launch of the Kin phone, loss of market share in the company's mobile phone business, and the need for the company to pursue innovations to take advantage of new form factors."

Ballmer could have received no bonus at all, so not all was lost. The total pay that Ballmer took home for fiscal 2010 totaled $1.34 million. 
Reuters reports that Ballmer has 408 million shares of Microsoft for 4.7% of the company estimated to be worth about $10 billion.

Forbes lists Ballmer as the 16th richest person in America.



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Reasonable???
By theArchMichael on 10/1/2010 9:34:37 AM , Rating: 5
Am I missing something? Or does 1.3 million seems like a pretty reasonable salary for a tech giant CEO? The bonus seems pretty fair as well.

If this is as it appears, I think it's a great trend. It sucks when all the engineers and programmers do all the work and the Suits take all the credit... not to mention the money.




RE: Reasonable???
By theArchMichael on 10/1/2010 9:37:18 AM , Rating: 2
quote:
Reuters reports that Ballmer has 408 million shares of Microsoft for 4.7% of the company estimated to be worth about $10 billion.


I wonder if he bought this stock on his own or if he is getting stocks in lieu of additional salary....


RE: Reasonable???
By theapparition on 10/1/2010 9:40:19 AM , Rating: 3
Both


RE: Reasonable???
By MrBlastman on 10/1/2010 9:49:14 AM , Rating: 4
Compared with Larry Ellison, it is _more_ than reasonable. Larry once took home 700 Million in one year. Over the last 5 years, he has averaged 49.45 Million a year.


RE: Reasonable???
By Taft12 on 10/1/10, Rating: 0
RE: Reasonable???
By vol7ron on 10/1/2010 10:03:46 AM , Rating: 3
Yeah... Microsoft's cap is bigger by 80B; that difference is over 70% of Oracle's current cap - pretty significant.

It doesn't matter how many unprofitable ventures you have, so long as your profitable ones cover your losses.


RE: Reasonable???
By MrBlastman on 10/1/2010 10:27:36 AM , Rating: 5
True but...

Microsoft has 89,000 employees, whereas Oracle has 105,000. The amount of revenue generated per employee at Oracle is 255428.00, the amount at Microsoft is 696506.00--that's a pretty significant difference.

Either the employees at Microsoft are being paid far more or Oracle is running a sweatshop that just isn't delivering the goods.

Okay--that isn't completely true. In the same 5-year period, Microsoft's stock went from 27.35/shr to 24.52/shr, where Oracle's went from 17.74 to 27.48. Hmm... They're crackin' that whip hard! The shareholders are happy. :)

I do know for a fact though that Larry _hates_ to give out raises. He deplores it, even when they are making huge profits.


RE: Reasonable???
By fic2 on 10/1/2010 6:39:01 PM , Rating: 3
Apparently Larry doesn't hate receiving raises, though.


RE: Reasonable???
By The Raven on 10/1/2010 10:07:21 AM , Rating: 1
I would have to agree (though it is a shame that the engineers don't get some more of that). But you also have to take into account performance. And from what I'm seeing, he's not doing that great a job. Of course that is just from my point of view and I am a know nothing shlub.

But my point is there are Presidents/CEOs/COOs/etc. who are everything to the company, and then there are guys who are (reletively) easily replacable, which Balmer is IMO.

But the bonus that is bigger than the salary is really what I don't get. I don't run a company or anything, but that seems like a system that would be easily and grossly corruptable.


RE: Reasonable???
By Spivonious on 10/1/2010 10:23:09 AM , Rating: 2
Ballmer is only still in that position because he's been with MS for so long (30 years). If he was just a cookie-cutter CEO, I think he would have been gone after Vista flopped.


RE: Reasonable???
By theapparition on 10/1/2010 10:55:47 AM , Rating: 3
A bonus larger than salary is a HUGE benefit to a company. The salary is contractually owned, where bonus is only available if certain metrics are met. If the company doesn't perform, then they don't have to pay the bonus, not the same can be said on salary, that must be paid.

Similar to professional sports players, whos base salary is fixt and then supplimented against performance metrics (ie, rushing so many yards, hitting so many homeruns, etc).


RE: Reasonable???
By The Raven on 10/1/2010 2:23:03 PM , Rating: 2
Those are good points. I guess I'm just a work what you're paid for kind of guy. For example, I hate the tipping system.

So in theory, I would like Balmer's set up if everyone who performed equally in accordance with their contracted salary also got the same treatment. But I doubt there are people who work just as hard for $50k getting 100k bonuses. I only hear about this stuff from the CEOs. And I'm not condeming them. Its their company; they can do whatever they want. I'm just thinking that this doesn't make sense.


RE: Reasonable???
By fic2 on 10/1/2010 6:42:47 PM , Rating: 2
Except apparently on Wall Street where the bonuses are also contractually owed. Stuff we found out when the U.S. taxpayers had to pay so many exec bonuses during the bailouts.


RE: Reasonable???
By chripuck on 10/4/2010 3:07:00 PM , Rating: 2
The only execs who were paid a bonus during the bailout were AIG execs in one of their spin off divisions which did fantastic in 2008. They deserved and earned their bonuses.


RE: Reasonable???
By The Raven on 10/4/2010 5:29:57 PM , Rating: 2
I disagree with this sentiment. My company (very large BTW) reduced bonuses for all employees because of the recession. I didn't get the bonus that I worked for and deserved. And I'm ok with that because otherwise the company as a whole might break under the financial strain.

Add to that the fact that the company was saved by the taxpayers (like me, who had their bonuses cut). And they get huge bonuses?! Not cool, anyway you slice it.


RE: Reasonable???
By weskurtz0081 on 10/1/2010 10:14:28 AM , Rating: 2
How many of those engineers do you think would be able to effectively run the company? Different trades my friend, different trades. Most of those engineers would likely run MS into the ground, that's why they are engineers and not CEO's.

I do agree though, it would be cool to see salaries equalize a little, but not at the expense of messing with the market. If supply and demand say that a CEO is worth $10 Million, then pay him $10 Million.


RE: Reasonable???
By therealnickdanger on 10/1/2010 10:24:04 AM , Rating: 2
Exactly my thoughts.

While the engineer who came up a cool interface or programmed a 10% performance increase into an OS might be one hell of an engineer, could he successfully combine the efforts of an entire team of engineers, marketing personnel, and focus groups? Could he allocate funding from multiple divisions and make tough decisions that might result in multi-million or multi-billion dollar losses or hundreds or thousands of jobs?

IMO, there are only a handful of people with the drive and determination to do that type of job. They either become CEOs or politicians. :)


RE: Reasonable???
By mcnabney on 10/1/2010 10:49:07 AM , Rating: 1
You really have no idea how companies work.

CEOs don't do any of that stuff. Their job is to maintain the right talent in the right roles at the director level and higher. They also have the ability to red/greenlight projects. All of the heavy lifting in managing a company is done by Finance and department directors. The top people are just front men (and a few women) who act as both cheerleader and top-talent manager.

That being said, all of the 'real' work in the company is done by engineers, senior analysts, and project managers.


RE: Reasonable???
By Reclaimer77 on 10/2/2010 1:01:41 AM , Rating: 4
When engineers and programmers put up billions of dollars to R&D their products, advertise them, provide their own state of the art workspaces, launch their products globally etc etc, you let me know.

A successful business like Microsoft is a team effort, I don't see CEO's "taking all the credit". But teams need leaders and managers. It's just the way it is and always will be. Why imply some kind of disparity where none realistically exists?

Now go ahead and -1 me, I know I know, Microsoft sucks, CEO's suck, corporations suck bla bla I get it.


What were they thinking?
By quiksilvr on 10/1/2010 9:48:49 AM , Rating: 1
Did they honestly believe people were going to get this over the massive Android and iPhone competition? How about next time you make sure what the hell you guys are doing before wasting millions on a project like this?




RE: What were they thinking?
By Lonyo on 10/1/2010 10:34:02 AM , Rating: 2
What are you thinking?
Something like 25% of phones in the US are smartphones.Kin wasn't aimed at the smartphone market. That means the iPhone and most Android phones aren't competition. It was aimed at the lower end of the market.

Before you ask what Microsoft were doing, try and learn what they were doing.

http://en.wikipedia.org/wiki/Feature_phone
That might help as as starting point.


RE: What were they thinking?
By mcnabney on 10/1/2010 10:54:15 AM , Rating: 3
The Kin was a feature phone that was foolishly designed with a massive data backup backend which required a smartphone data plan. Requiring the smartphone data plan MADE IT a smartphone. It was just a smartphone that couldn't do any of the cool things a smartphone can do. That is why it failed.


RE: What were they thinking?
By theapparition on 10/1/2010 11:03:01 AM , Rating: 4
Couldn't agree more. This could have been a hit with tweens, if only MS convinced Verizon to market it as a feature phone with no data plan. Parents would have bought this easily for thier children (I know I would have). As it was, forcing the extra data plan costs, it was like paying the same monthly payment for a Ferrari and getting a Jetta instead.
If they priced it like a Jetta, then it would have sold much better. This wasn't a failure of product, just a complete failure of management.


RE: What were they thinking?
By cjohnson2136 on 10/1/2010 12:07:31 PM , Rating: 2
i would think a failure in both managment and marketing


RE: What were they thinking?
By mcnabney on 10/1/2010 1:03:28 PM , Rating: 2
The cloud backup feature, the crux of the Kin, would require GBs of data transfer from Verizon. That is why it had to go on a smartphone plan instead of a cheap feature phone data plan. The marketing people should have spotted this requirement far in advance and asked the software engineers for an option. Maybe they could have shifted the cloud access function off of Verizon and do it only on WiFi. That would have allowed it to squeeze into a $10 feature phone data plan instead of a $30 smartphone plan.

This is actually a good example of how Microsoft is screwed up. It only knows how to compete well when it has a forced monopoly. Nobody had to get the Kin and use it. Microsoft plowed ahead with their plans without considering how the market would react. They just can't think outside of the box anymore.


By StevoLincolnite on 10/1/2010 10:25:56 PM , Rating: 2
quote:
It only knows how to compete well when it has a forced monopoly.


Not at all, Microsoft competes fairly good in several markets despite not being a monopoly in them.

They are incredibly profitable in the home console market (The Xbox 360).

The Zune despite relatively poor sales is an excellent machine.

And I expect good things to come from the Windows Phone 7 as well.


only 670k
By cjohnson2136 on 10/1/2010 10:03:31 AM , Rating: 2
umm ok he is wirth 10 billion i really dont think he cares about 670k. This whole article seems REALY pointless




RE: only 670k
By vol7ron on 10/1/2010 10:05:01 AM , Rating: 2
I think the article was more about the Kin's failure than his bonus/salary.


RE: only 670k
By cjohnson2136 on 10/1/2010 10:07:00 AM , Rating: 2
well then they should report on that. I would rather hear the numbers of how the Kin did then what Ballmer lost on it.


RE: only 670k
By xti on 10/1/2010 10:22:07 AM , Rating: 2
its pointless as OP said.


RE: only 670k
By amanojaku on 10/1/2010 10:31:44 AM , Rating: 2
The OP was right: this article is pointless. It pales in comparison to the source, which is this link:

http://www.reuters.com/article/idUSN30295707201009...

The one Shane linked to goes somewhere else, but it's not uncommon for a link to change.

Anyway, the source points out that Ballmer's bonus pay was reduced for a variety of factors, including the Kin. The board is happy with some of the work Ballmer has done this year, but wants him to get off his ass on other issues. I hope this was done to other execs, as well. There's a lot of money spent on performance-based bonuses, and I know a lot of people haven't performed there lately.


Easy to forget Taxes
By bobcpg on 10/1/2010 10:04:15 AM , Rating: 2
quote:
The total pay that Ballmer took home for fiscal 2010 totaled $1.34 million.


I know its a lot but he didn't take home that much. Remember he has a lot of people depending on him to buy them their ho-ho's and soda-pop.




RE: Easy to forget Taxes
By mcnabney on 10/1/2010 10:58:47 AM , Rating: 4
He makes most of his money through stock.

And capital gains on stock are at a far lower rate than what he normally would pay. At 15%, it is lower than rates that most working people pay.


Money lost
By Brandy Took on 10/1/2010 10:22:04 AM , Rating: 3
A lot more the 670K was lost. I would expect that the MS stock price was impacted by this as well. A positive launch could easily added $0.25 to the stock price and at that rate Ballmer is out $100,000,000 in stock value.




"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer














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