In one embodiment, a method of forming a semiconductor device is provided that includes providing a gate structure on a semiconductor substrate. Sidewall spacers may be formed adjacent to the gate structure. A metal semiconductor alloy may be formed on the upper surface of the gate structure and on an exposed surface of the semiconductor substrate that is adjacent to the gate structure. An upper surface of the metal semiconductor alloy is converted to an oxygen-containing protective layer. The sidewall spacers are removed using an etch that is selective to the oxygen-containing protective layer. A strain-inducing layer is formed over the gate structure and the semiconductor surface, in which at least a portion of the strain-inducing layer is in direct contact with the sidewall surface of the gate structure. In another embodiment, the oxygen-containing protective layer of the metal semiconductor alloy is provided by a two stage annealing process.