Microsoft CEO Satya Nadella was awarded a pay increase for the 2024 fiscal year, receiving over $30 million more than the previous year. However, his total compensation could have been $5.5 million higher if not for a series of cyberattacks that impacted the company.
For the fiscal year ending on June 30, Nadella’s total compensation amounted to $79.1 million, a significant increase from the $48.5 million he received in the prior year. The majority of his compensation comes in the form of stock. In light of the security breaches, Nadella requested that the cash incentive portion of his pay be adjusted.
The decision to reduce Nadella’s cash incentive came after the U.S. Department of Homeland Security released a report in April detailing China’s breach of U.S. government officials’ email accounts, which Microsoft had disclosed in July 2023. Additionally, in January of the same year, it was revealed that Russian intelligence had accessed email accounts of some of Microsoft’s top executives.
Following these incidents, Microsoft announced plans to enhance its security practices to address the vulnerabilities highlighted in the government report. The report emphasized the importance of the company’s CEO and board of directors focusing on improving the overall security culture of the organization.
In response, Nadella communicated to employees in a memo in May that security would be prioritized above all other considerations. In June, Microsoft stated that cybersecurity efforts of employees would be factored into compensation decisions.
The cash incentive component of Nadella’s pay is primarily based on Microsoft’s performance relative to revenue and operating income targets. Initially set at $10.66 million, the full board approved a reduced cash incentive of $5.2 million at Nadella’s request.
The compensation committee explained that Nadella acknowledged Microsoft’s strong performance but emphasized his personal commitment to security as the reason for requesting a reduction in his cash incentive. He recognized the need for swift actions to address the changes required in response to the evolving cybersecurity threat landscape.
Microsoft’s security business was a significant revenue generator in 2022, surpassing $20 billion in revenue, which exceeds the total revenue of many standalone security companies.