Zune dude is highest paid senior Microsoft exec

Robbie Bach, Microsoft's Entertainment & Devices president, earned over $6 million

Now here's something surprising. The guy responsible for Zune and Xbox is the highest paid senior Microsoft executive, according to documents filed with the SEC on Tuesday. Robbie Bach, who oversees Microsoft's Entertainment & Devices (EDD) Division earned $6.24 million in 2009, compared to CEO Steve Ballmer's $1.27 million.

The chart below documents the compensation awarded to each of the companies top executives for the past two years, according to Microsoft's 14A proxy statement filed with the SEC. Note that Steve Ballmer saw a drop in pay in 2009, which reflects what some say call the company's worst fiscal performance in history.

But the real shocker is the compensation awarded to Back, the guy responsible for Zune, Xbox and Windows Mobile. He earned over $6 million, including the highest cash bonus at $1.12 million and the most stock awards. This although Ballmer went on record last week and told an audience of venture capitalists that Microsoft had "screwed up" with the Windows Mobile operating system, and the group responsible for building it had been restructured.

                       
Named Executive Officer

Base Salary

($)(1)

  Cash Incentive

Payments

($)(2)

  Fair Market Value

of Stock Awards

at Grant

($)(3)

  Total Direct

Compensation

Awarded for

Fiscal Year

Performance

($)

 

Steven A. Ballmer

                     

2009

$ 665,833       $ 600,000       N/A       $ 1,265,833    

2008

  640,833      700,000    N/A      1,340,833   

Christopher P. Liddell

                     

2009

  561,667      595,018    2,379,982      3,536,667   

2008

  541,667      420,000    3,828,668      4,790,335   

Robert J. Bach

                     

2009

  641,667      1,120,010    4,479,990      6,241,667   

2008

  620,833      675,000    6,988,861      8,284,694   

Stephen A. Elop

                     

2009

  641,667      840,008    3,359,992      4,841,667   

2008(4)

  279,948      275,000    3,483,535      4,038,483   

B. Kevin Turner

                     

2009

  641,667      952,019    3,807,981      5,401,667   

2008

  620,833      1,000,000    6,988,861      8,609,694   

We'll note right off that the EDD unit is an odd bird at Microsoft. It is composed of four businesses: the Interactive Entertainment Business which produces Xbox and games and shoulders Microsoft's problematic Mobile Communications Business, including Windows Mobile software. Stuff aimed at television is in this unit, such as Microsoft Mediaroom, Windows Media Center, as is Zune. This division is responsible for Microsoft hardware products (mice, keyboards,Webcams and laser pointers, the Surface PC) and for Microsoft Auto and Windows Embedded software. Weirdly, it is also the unit responsible for Office for Mac.

What did Bach's unit do in 2009 to earn him such a handsome salary? Not a lot. It's one shining glory wasn't very shiny. The company shipped 11.2 million Xbox consoles in 2009 compared with 8.7 million in 2008, but it had to cut prices on them and so actually earned less revenue. In Microsoft's own words:

"EDD revenue decreased across most lines of business. Revenue from our non-gaming business decreased $292 million or 12%, primarily reflecting decreased Zune and PC hardware product revenue. Xbox 360 platform and PC game revenue decreased $161 million or 3%, primarily as a result of decreased revenue per Xbox 360 console due to price reductions during the past 12 months, partially offset by increased Xbox 360 console sales and increased Xbox Live revenue ... Research and development expenses increased $252 million or 16%, primarily reflecting increased headcount-related expenses associated with the Windows Mobile device platform, driven by recent acquisitions."

Bach's division only made $169 million in profit on $7.75 billion in revenue. In fiscal '07 the unit has a $1.9 billion loss, so we'll give him credit for moving in the right fiscal direction.

But in comparison, Steven Elop, who earned a nothing-to-sneeze-at $4.84 million in 2009 ($1.4 million less than Bach!) runs Microsoft's ultra rich Business Division, responsible for the Office product line. That unit made $12.14 billion in profit on $18.89 billion in revenue.

Compare this also to Microsoft's Server & Tools division, responsible for Windows Server, SQL Server, etc. It earned $14.13 billion in revenue and $5.33 billion in profit. That unit's president, Bob Muglia, didn't rate inclusion in the chart.

The only business unit that performed worse in 2009 than EDD was Microsoft's Online Services Business, which logged a $2.25 billion loss.

Interestingly, too, this proxy statement is accompanied by a new, "Say on Pay" scheme for compensation of Microsoft executives. (A trendy tactic for IT companies and one adopted a while ago by Apple and Verizon) The company will be asking its shareholders to advise and bless compensation schemes for its senior executives over three-year periods. Shareholder's opinions, however, will not be binding.

Do you think Robbie earned his $6-plus million in 2009?

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