Microsoft cuts Ballmer's bonus after Windows 8, Surface tablet failures

Steve Ballmer might have provided employees with an epic goodbye at a recent town hall, but it didn't help him earn a bigger farewell payout. The outgoing CEO will only receive a percentage of his full bonus this year.

According to an annual proxy statement filed with the SEC, Microsoft's outgoing chief has earned an "incentive plan award" of $550,000 (£343,000) - which is only 79 per cent of his intended target.

The award is based on Ballmer's performance self-assessment, as well as considerations like financial and operational performance, and other relevant details, as determined by the board. Ballmer's bonus potential for the 2013 fiscal year was limited to a cash award of up to 200 per cent of his fiscal year 2013 base salary of $700,000 (£436,000), the filing said.

"Mr. Ballmer continued to lead the company in its transformation to a devices and services company in 2013," the filing said, adding that the tech giant ended the fiscal year with record revenue of $77.8 billion (£48.5 billion).

Still, despite the fact that Microsoft sold over 100 million Windows 8 licenses, "the challenging PC market coupled with the significant product launch costs for Windows 8 and Surface resulted in an 18 percent decline in Windows Division operating income," the filing said.

"Slower than anticipated sales of Surface RT devices and the decision to reduce prices to accelerate sales resulted in a $900 million inventory charge."

Despite the lacklustre performance of the Surface lineup, the Redmond firm is preparing to launch a second generation of the tablets. Unveiled last month, the Surface 2 and Surface Pro 2 promise significant performance and battery life boosts, as well as new features and accessories.

Ballmer announced in August that he will retire within the next year, or when the board finds a replacement. Amongst those on the special selection committee to find a new CEO is Bill Gates, who several unnamed investors are reportedly trying to oust as chairman of the board.

But according to Reuters, Gates - as well as Ballmer - are up for re-election to Microsoft's board of directors, and will likely retain their positions.