Microsoft CEO Satya Nadella was given a $30 million pay rise — 63% more than he earned last year — even as the Windows maker cut its workforce by 2,500 people.
Stock awards for Nadella, who earned $48.5 million in 2023, rose to about $71 million from $39 million a year earlier, according to an SEC filing.
The increase comes after Microsoft cut 1,900 people from its gaming workforce following the company’s $69 billion purchase of Activision Blizzard.
Months later, it shut down another gaming firm, Arkane Austin, and handed out pink slips to 650 employees.
However, Nadella was rewarded with a sizeable windfall that would have been higher had it not been for the cybersecurity breaches that caught the attention of Congress.
Nadella sought a pay cut that slashed $5.5 million from his total compensation for fiscal 2024 because of the cyberattacks that have rocked the software giant, which the government has claimed can be traced to Russia and China.
A cash incentive that Nadella was in line to receive, which was tied largely to revenue and operating income targets, was cut from $10.66 million to $5.2 million, according to the filing, first cited by CNBC.
Microsoft said in its filing that Nadella asked the company’s compensation committee to take the security breaches into account when setting his pay.
“Mr. Nadella agreed that the Company’s performance was exceptionally strong, but reflecting on his personal commitment to safety and his role as CEO, asked the Board to consider moving away from established performance metrics and reducing its cash incentive for reflected his personal responsibility for the focus and speed required for the changes that today’s cybersecurity threat landscape indicated were necessary,” the committee wrote.
Lawmakers in June grilled Microsoft President Brad Smith over the tech giant’s security practices and ties to China, a year after suspected China-linked hackers spied on federal emails by hacking the firm.
Hackers accessed 60,000 State Department emails by breaking into Microsoft systems in the summer of 2023, while Russian-linked cybercriminals separately spied on the emails of senior Microsoft staff this year, according to company disclosures.
Microsoft, the world’s largest software maker, is also a major vendor to the US government and national security institutions.
Microsoft’s business accounts for about 3% of the US federal IT budget, Smith said at the hearing.
Lawmakers grilled Microsoft over its inability to prevent Russian and Chinese attacks, which they said put federal networks at risk despite not using sophisticated tools.
In May, Nadella released a memo to employees titled “Priority Safety Above All Else.”
“If you’re faced with the trade-off between security and another priority, your answer is clear: Do security,” Nadella wrote.
Microsoft said it would consider employees’ cybersecurity contributions when determining compensation.
Despite the hacks, Nadella has offered to investors. Since Jan. 1, Microsoft stock is up more than 16% — though it still lags behind the S&P 500, which has delivered gains of more than 23% year-to-date.
Microsoft is scheduled to report its latest quarterly earnings next week.
The consensus view among Wall Street analysts is that the company posted a 3% year-over-year increase in earnings per share, as well as a 14% increase in revenue compared to the same period a year ago.
As of Friday, Microsoft, with a market capitalization of $3.2 trillion, was the third most valuable company in the world behind Nvidia, which passed Apple.
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