Microsoft CEO Satya Nadella received a $79.1 million pay package for fiscal year 2024, marking a 63% increase from his previous year's pay, according to a proxy filing on Thursday.
The raise comes despite Nadella's request for a pay cut following several cybersecurity breaches during the year.
The increase is worth more than $30 million, marking a significant increase to $79.1 million from $48.5 million in the year before, as per the proxy filing. However, his total compensation could have been even higher — about $5.5 million more — if not for the reported cybersecurity incidents.
He had requested the company's board compensation committee to reduce his cash incentive "to reflect his personal accountability" for the company's changes in response to cybersecurity risks.
Most of Nadella's pay comes in the form of shares.
"Mr. Nadella agreed that the Company's performance was extremely strong, but reflecting on his personal commitment to security and his role as the CEO, asked the Board to consider departing from the established performance metrics and reduce his cash incentive to reflect his personal accountability for the focus and speed required for the changes that today's cybersecurity threat landscape showed were necessary," the committee wrote in the filing.
Nadella's request for a pay reduction followed a report by the Department of Homeland Security detailing a cyber breach involving U.S. government officials' emails by China, which Microsoft disclosed in July 2023.
The company also disclosed another similar hack in January this year, where Russian intelligence was able to access email accounts of some of the company's top executives. In response to these incidents, Microsoft pledged to improve its security practices and address the shortcomings pointed out in the government's report.
"Customers would benefit from its CEO and board of directors directly focusing on the company's security culture," the report stated.
In May, Nadella issued a memo to employees, highlighting the company's goal to prioritize security. A month later, Microsoft announced that employee efforts in cybersecurity would be considered in compensation decisions.
The cash incentive part of Nadella's pay is based on the software maker's revenue and operating income. Initially, it was set to be $10.66 million, but the board opted to approve a reduced bonus of $5.2 million.
"The board reviewed the company's performance and strongly believes that Mr Nadella provided exceptional leadership and was both critical in achieving both the extremely strong performance of the company and personally responsible for the ongoing repositioning of its investments and priorities," the committee wrote.
In 2022, the company's security business generated more than $20 billion in revenue, surpassing the total revenue of many security companies.
