Microsoft’s chief executive, Satya Nadella, earned a total of $79.1 million last year, marking a significant 63% increase in his overall compensation compared to the previous year. This substantial pay rise occurred despite Nadella’s own request for a reduction in one part of his pay package, a step he took to assume responsibility for cybersecurity issues within Microsoft. This decision led to Nadella receiving $5 million less than he would have otherwise.
In line with trends across the technology industry, Microsoft has implemented extensive job cuts this year, with thousands of layoffs, including significant reductions in its gaming division. Nonetheless, in a proxy statement submitted to the U.S. financial regulator, Microsoft’s board emphasized the company’s strong financial performance, noting a 16% revenue growth for the fiscal year ending on June 30, 2024.
The board’s compensation committee stated in a letter to shareholders that Nadella fully recognized Microsoft’s achievements over the past year. According to the committee, “Mr. Nadella agreed that the Company’s performance was extremely strong.” In light of his role in overseeing the company, he asked them “to consider departing from the established performance metrics and reduce his cash incentive to reflect his personal accountability” for a series of cyber incidents affecting Microsoft.
One prominent cybersecurity incident involved a breach reported in July 2023, when hackers accessed the email accounts of around 25 organizations, including government entities. Microsoft attributed the attack to sources in China, although the Chinese embassy in London countered this, labeling the claim as “disinformation.” The company’s fiscal year closed on June 30, 2024, just weeks before a major internet outage affected Microsoft Windows PCs globally, causing disruptions around the world. Although this incident was not linked to cybercrime, another outage in July led Microsoft to apologize, as this one was indeed caused by a cyber attack.
As part of the adjustments to Nadella’s pay package, the compensation committee made a significant reduction to his cash pay, cutting it by more than half to $5.2 million, which now represents less than 7% of his total compensation. The bulk of Nadella’s earnings, approximately $71.2 million, came from stock options.
Luke Hildyard, director of the High Pay Centre, commented on the size of Nadella’s earnings, acknowledging that Microsoft’s robust financial results could superficially justify the high payout. However, he questioned the necessity of such vast sums for an individual who is already extraordinarily wealthy. He stated, “We might also ask whether the extra $79 million on top of $49 million last year for someone who is already worth hundreds of millions, with more money than they could spend over multiple lifetimes of absolute luxury, is really necessary as a reward or incentive.” Hildyard also emphasized the role of Microsoft’s employees, customers, and society in the company’s success, suggesting that “the proceeds of that success should be shared a little more evenly.”
In comparison with Nadella’s pay, other high-profile tech leaders also received substantial earnings. For example, Apple’s CEO Tim Cook earned $63.2 million in 2023, and Jensen Huang, CEO of Nvidia—the world’s most valuable semiconductor company—was paid $34.2 million for the 2024 fiscal year. Nevertheless, none of these tech executives approach the compensation scale of Tesla’s Elon Musk, whose pay package could reach up to $56 billion.
This year’s executive compensation landscape in the tech sector reflects the sector’s intense focus on financial growth and stock performance, which has led to both high pay packages for executives and significant layoffs among staff across major firms.