Good year for Microsoft execs

Excerpts from the blog

Microsoft disclosed executive pay and bonuses Monday, and the big winner this year appears to be Chief Operating Officer Kevin Turner. But all the top Microsoft executives received raises and higher bonuses in fiscal 2008 than in fiscal 2007.

The pay, disclosed in the company's annual proxy statement, is apparently weighted to favor earnings performance over stock-price gains, since MSFT was a snooze over that period.

As it has in years past, the board offered to give Chief Executive Steve Ballmer a salary more in line with those of other big company bosses, but he declined, according to the proxy:

"During this period, the average total compensation for the CEOs of our peer group companies was $14.6 million," the proxy noted.

"In contrast, Mr. Ballmer's total compensation for fiscal year 2008 was $1.35 million.

"As the principal leader of Microsoft, Mr. Ballmer focuses on building the company's long-term success, and, as a significant shareholder, his personal wealth is tied directly to sustained increases in Microsoft's value. While the Compensation Committee believes that Mr. Ballmer is underpaid for his role and performance, it has accepted his recommendation to continue with Microsoft's historical practice for setting his total compensation opportunity."

Ballmer's Microsoft shares — 4.51 percent of the total — were worth $10.25 billion as of 4 p.m. Monday.

A few anomalies in the pay report reflect deals made when the company hired Turner and Chief Financial Officer Chris Liddell.

As part of their relocation deals, Microsoft offered to buy their houses if they didn't sell quickly enough.

That happened, and Microsoft took losses when it sold both: $2 million on Liddell's place and $254,000 on Turner's.

What did they do to deserve the bonuses? Here's a sample of the "performance commitments" against which the executives were judged, taken from the proxy:

"Liddell: improving and streamlining reports and financial processes such as strategy, target setting, and budgeting; delivering on all of the finance function results for Sarbanes-Oxley Act compliance, investment returns, workplace infrastructure, and share buyback programs; and managing and continuously improving investor relations."

"Johnson: the successful integration of the aQuantive acquisition; the financial performance for the Client and the Online Services Business; and driving results on key strategies for digital advertising and online services."

"Raikes: the financial performance for the Microsoft Business Division and the Server and Tools Business; progress on product development; and key product launches."

"Turner: financial performance; growth in emerging markets; driving customer satisfaction; unit volumes; segment and category sales; marketing effectiveness; and increasing productivity."

Executive compensation hasn't been a big issue at shareholder meetings, but investors will have a chance to weigh in on this and other topics at the annual meeting Nov. 19 at Meydenbauer Center in Bellevue.

Back at MSN

Microsoft has put a grizzled veteran of its Internet wars, Yusuf Mehdi, back at the helm of MSN and the consumer-facing portion of its search business.

Mehdi, a senior vice president, is now leading "audience marketing" for MSN and Microsoft's search business, which means "he'll have responsibility for product management, marketing, partnerships and business development for search and MSN," spokesman Frank Shaw said.

From 2000 to 2005, Mehdi led the MSN engineering group, including MSN.com, adCenter and MSN Search.

Lately he's been working on strategic partnerships, such as the acquisition of Seattle-based aQuantive and attempted Yahoo merger.

Mehdi's one of the few locals in top positions at Microsoft.

He's a Mercer Island native and has a master's degree from the University of Washington. He joined the company in 1992.

With details and discussion of the next version of Windows expected to be surfacing at a conference next month, it makes sense to lighten the load carried by Bill Veghte, senior vice president of Windows and online services.

Veghte had been leading Windows, Windows Live, search and MSN; now the latter two are moving to Mehdi.

Brian McAndrews continues to run the advertising side of the business, and Satya Nadella will continue leading the engineering of MSN, search and ad platforms.

This material has been edited for print publication.

Brier Dudley's blog excerpts appears Thursdays and occasionally on other days of the week. Reach him at 206-515-5687 or bdudley@seattletimes.com.