Microsoft Corporation will hold its annual general meeting tomorrow in Washington State. According to a document recently submitted by the company to the U.S. Securities and Exchange Commission (SEC), the compensation of the top five executives, including current CEO Steve Ballmer, has seen its first decline in nearly four years. The average compensation is $7.2 million, which represents a 3.7% decrease from the previous fiscal year.
This document provides a comparison chart showing the trend of compensation for the top five executives over the past four years versus the trend in operating profits. In the fiscal year 2013, the total compensation (including salary, bonuses, and stock) for these five executives amounted to $36 million, averaging $7.2 million per person, marking a 3.7% drop compared to fiscal year 2012. Although Microsoft states that executive compensation is not directly tied to any specific metric, the chart shows a strong positive correlation between executive compensation trends and company performance.
In the fiscal year 2013, the company's revenue decreased by 5.4% year-over-year to $27 billion, leading to a 3.7% reduction in executive compensation; whereas in fiscal years 2011 and 2012, the company's revenue increased by 12.7% and 4.9%, respectively, resulting in a 23.1% and 22% increase in executive compensation. Notably, in fiscal year 2012, the growth rate of executive compensation was more than four times that of the company's revenue growth.
Despite the fact that the compensation calculation plan for Microsoft executives is approved by shareholders, they do not determine specific compensation packages through voting. At the upcoming shareholder meeting tomorrow, discussions will also take place regarding a new executive incentive plan. Under this new plan, Microsoft will adjust the reward cap for each executive from the previous limit of $20 million to no more than $20 million in stock options or stock appreciation rights, plus $5 million in stock awards. Additionally, cash rewards will be capped at $5 million, aligning with the stock award limits.