Microsoft awarded CEO Satya Nadella a substantial pay increase for the 2024 fiscal year, bringing his total compensation to $79.1 million, a significant rise from $48.5 million the previous year. However, the package would have been $5.5 million higher if not for recent cybersecurity breaches.
The board’s compensation committee reported that most of Nadella’s compensation came through stock, but Nadella requested a reduction in the cash incentive component to reflect the company’s recent security challenges. This request followed an April report from the U.S. Department of Homeland Security, which independently reviewed China’s breach of U.S. government officials’ email accounts—a cyberattack Microsoft publicly disclosed in July 2023. Additionally, in January, Microsoft revealed that Russian intelligence had accessed the email accounts of several of its senior executives.
The report recommended that Microsoft’s CEO and board prioritize building a robust security culture within the company. In response, Nadella informed employees via a May memo that the company would elevate security as its top priority. By June, Microsoft announced that it would factor employees’ contributions to cybersecurity into compensation decisions.
Nadella’s cash incentive, typically calculated based on Microsoft’s performance in reaching revenue and operating income targets, was initially set at $10.66 million. However, the board, upon his request, adjusted the incentive to $5.2 million. The compensation committee noted that Nadella had acknowledged Microsoft’s strong overall performance but, out of personal accountability, asked the board to diverge from traditional performance metrics. Nadella indicated that the adjustment would better reflect his commitment to swiftly implementing the security changes necessary in today’s threat landscape.
Microsoft’s security business remains a key revenue driver, generating over $20 billion in 2022, a figure surpassing the total revenue of many dedicated security firms.
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