Well, that depends on how they measure performance. I doubt they measure performance in "hours worked" - after all, many people will have a contract which already says how many hours they have to work. If performance is measured by looking at the ratio of "projects done/hours worked", with larger projects carrying more weight, than browsing the web for 50 minutes out of an hour brings your performance down.

It does raise the question of how one might measure the productivity of coders.

Indeed. And one should realize that measuring performance isn't only done because managers like to do just for the heck of it. If you want to get a raise, or a performance bonus - or when it's a matter of keeping your job when there are lay offs, you benefit from an objective measurement of performance as well. Because you will be competing against the other programmers.