Satya Nadella Nets a Massive Payday

Satya Nadella Nets a Massive Payday

Membership in the CEO club has its privileges

Well, now we know why Microsoft CEO Satya Nadella doesn't have any good advice for people looking for a raise: He doesn't need one. According to a recent SEC filing, Microsoft handed Mr. Nadella $84 million in salary, bonus and stock grants this past fiscal year, and it will pay him millions more each year going forward.

"The chief executive officer role at Microsoft is demanding, requiring mastery of complex, rapidly evolving business models and the ability to lead a highly technical organization," a letter to Microsoft's board of directors explains. "With the appointment of Satya Nadella, we believe we fulfilled our goal, selecting the best candidate to bring the Company renewed and continued success."

Mr. Nadella's pay package includes a base salary of about $919,000, a cash bonus of $3.6 million, a one-time stock grant of over $59 million that he must hold on to until at least 2019, and a one-time stock grant worth $13.5 million that was given to him in August 2013 to keep him at Microsoft until its CEO search was completed.

Going forward, Mr. Nadella can enjoy a base annual salary of $1.2 million, an annual cash incentive award of up to $3.6 million depending on his performance, and an annual equity award for shares of Microsoft common stock worth $13.2 million.

Microsoft justifies these figures in its report by noting that there is "intense competition for talent in technology businesses" and that because the firm does not maintain employment agreements with executive officers, it needs to award them accordingly. Many senior Microsoft executives were given stock grants to ensure that the transition from previous CEO Steve Ballmer to Mr. Nadella went smoothly.

If it makes you feel any better about your comparatively lower position in life, it's worth remembering that Mr. Nadella's first-year payout is dwarfed by that of Tim Cook, who earned over $300 million in his first year as Apple's CEO, mostly because of a one-time stock grant. But it's far more than the first year payouts to Oracle co-CEOs Safra Catz and Mark Hurd ($37.7 million each), Yahoo's Marissa Mayer ($36.6 million), IBM's Ginni Rometty ($16.1 million) or HP's Meg Whitman ($15.3 million). (Source: Business Insider.)

And to be sure, Mr. Nadella's job is not an easy one, as the recent flap over his comments about women asking for raises illustrates. Through a simple public statement, he now has the ability to materially impact Microsoft's stock price on the fly, a change that immediately impacts the financial well-being of millions of people. Daunting responsibility demands a daunting reward.

Incidentally, former Microsoft CEO Steve Ballmer defended Mr. Nadella's seemingly disconnected comments about karma and not asking for raises this week in an interview with Charlie Rose. "Satya spoke about his personal experience, actually he allowed good karma to happen and good things happened to him and he was very fortunate, and that's his genuine belief in life," he said. "He's showed he's a lovely human being, actually."

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