Satya Nadella requested a cut to his own pay package this year after Microsoft was hit with cybersecurity attacks—but despite the change still saw his overall compensation package climb by more than 60%.
Last year Nadella's pay packet totaled $48.5 million, with the company's 2023 proxy filing revealing a base salary of $2.5 million plus stock awards, cash incentive compensation and other compensation.
This year Nadella's total compensation rocketed to more than $79 million, with his base salary staying at $2.5 million. The bulk—95.8%— of his compensation is performance-based, the majority coming in the form of stock awards.
While this year Nadella's base salary stayed the same at $2.5 million, the CEO requested his cash incentive—representing 12.5% of his total compensation—be slashed by more than half.
It comes after Chinese hackers were able to infiltrate U.S. officials' accounts in 2023, with Russian hackers also gaining access to Microsoft leaderships' accounts at the start of 2024.
The Big Tech behemoth's 2024 proxy filing revealed Nadella would have earned more than $10 million in incentive-based cash compensation, but requested not to be awarded the sum.
The board's compensation committee wrote: "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."
As a result, the board approved a cash incentive for Nadella of $5.2 million—representing more than a 50% reduction from the $10.66 million he would have been awarded based on the financial and operational performance of the company.
This year's proxy report mentions the word 'cybersecurity' more than 30 times, clearly signaling to shareholders that the board is taking this issue seriously.
In March 2024, Microsoft admitted that a Russian cyber attack months prior was still "ongoing," adding that the attacker could have obtained data “to accumulate a picture of areas to attack and enhance its ability to do so.”
The company—with a market cap of more than $3 trillion—has prioritized defending against such attacks in the future, with Nadella leading the charge.
Its proxy statement reads: "In recognition of the growing number of cybersecurity threats and attacks from criminal enterprises and well-resourced nation-state actors on governments, businesses, and institutions around the world, including Microsoft itself, Mr. Nadella led the organization to prioritize fundamentals and drove rapid improvements in security practices, reaffirming security as the company’s top priority above all else.
"We are confident in Mr. Nadella’s leadership and ability to continue to strengthen the quality and capabilities of Microsoft’s products and services to protect our customers and build a safer world for all."
Microsoft did not immediately respond to Fortune's request for comment.
How much does Satya Nadella earn
While Nadella personally requested a 50% axe to one aspect of his total compensation, his overall package increased by more than $30 million compared to a year ago.
Microsoft used all the usual suspects when benchmarking its executive pay, examining how its competitors are retaining their top talent.
It focussed on the likes of Alphabet, Amazon and Nvidia within its own sector, while also looking at Tesla, Walt Disney and Pfizer more widely.
The compensation committee marks Nadella's performance against a range of metrics, including financial results—revenue is up 16% year-on-year to $245 billion—and operational considerations such as sustainability, culture and strategy.
The result was a base salary of the aforementioned $2.5 million, performance-based stock awards worth more than $71 million, and performance-based cash incentives of $5.2 million.
Rounding out the pay package was further 'other' compensation of approximately $170,000.
