Microsoft bags Wal-Mart exec for COO role

Microsoft on Thursday named a Wal-Mart Stores executive to serve as its chief operating officer, a role that has not been separated out at the software maker for some time.

The software behemoth hired Kevin Turner to fill the post. He will oversee sales, marketing and other aspects of the company's functional units. Product units will continue to report up to CEO Steve Ballmer.

Turner, who is 40, has been serving as CEO of Wal-Mart's Sam's Club warehouse unit. Before that, he was Wal-Mart's CIO.

Microsoft disclosed the details of Turner's pay package in a regulatory filing on Thursday with the Securities and Exchange Commission. Turner will be an "at will" employee, with a salary of $570,000 per year. He also will receive a $7m up-front payment and other stock awards to go towards helping compensate him for stock-based pay that he forfeits by leaving Wal-Mart.

Microsoft said its current sales chief, Kevin Johnson, will move to an unspecified new role once Turner joins Microsoft in the first week of September.

Ballmer said in a statement: "Over the past 13 years, Kevin Johnson has had an immense impact on the success we have realised at Microsoft. As he is one of Microsoft's strongest executives, I look forward to further applying Kevin's leadership in a very exciting capacity to be announced in the near future."

Microsoft said in June that it was giving Johnson a raise. A regulatory filing revealed that he will get a salary of $570,000 and also be eligible for a bonus of up to the same amount. In fiscal 2004, Johnson took home $480,336 in salary and a $435,000 bonus.

The chief operating officer post has not been filled at the Redmond, Washington-based company since president and COO Rick Belluzzo left in the spring of 2002.

Matt Rosoff, an analyst at Directions on Microsoft, said adding a clear number three person makes sense.

"I think it's a good and necessary move for Microsoft, as Steve Ballmer had a lot of direct reports, and probably doesn't need to have as tight control over day-to-day operations as he does over day-to-day product development," Rosoff said. However, he noted that, historically, "the number-three spot at Microsoft has been tough to fill, particularly for an outsider".

A Microsoft representative declined to say how many candidates the company interviewed and whether any insiders were considered for the post.

In an email to Microsoft workers on Thursday, Ballmer said: "Kevin Turner's experience as a proven leader of people in Wal-Mart's incredibly dynamic sales environment, his IT background as CIO of a world-class company and his familiarity with our products and technologies as a Microsoft customer for more than a decade uniquely qualify him to serve as our COO."

In addition to the up-front compensation, Microsoft will award Turner 325,000 shares of stock that will vest over a period of many years, beginning in 2008 and running through to retirement. Johnson will have to forfeit the entire $7m up-front payment if he leaves voluntarily or is terminated for cause before completing 12 months of employment. A portion of the hiring bonus will have to be repaid if he leaves voluntarily within three years or is terminated for cause.

Turner will also be eligible for a bonus of up to the amount of his salary and will participate in the company's stock award programme, with a target award of 624,000 shares. The actual size of the award will be determined by Microsoft's achievement of certain goals.

Additionally, Turner will be able to take part in an "executive relocation assistance programme", in which the company will arrange for a third party to purchase his current primary residence at its appraised value if it is not sold by a mutually agreed date.

The executives who will report to Turner include: international chief Jean-Philippe Courtois; Rodrigo Costa, who manages Microsoft's dealings with computer makers; Alain Crozier, chief financial officer in the sales and marketing group; government sales executive Gerri Elliot; Microsoft services and IT head Rick Devenuti; marketing chief Mich Matthews; and North America region boss Bill Veghte.

Turner had worked his way up through the ranks at Wal-Mart, according to his biography on that company's website. He joined the retailer in 1985 as a cashier at a store in Ada, Oklahoma, as he worked during college. He then joined the company's internal audit department in 1988 and, the following year, he moved to its information systems unit, working his way through a succession of jobs: business analyst, director, vice president, assistant CIO and then CIO.

Ina Fried writes for CNET News.com