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Microsoft CEO Satya Nadella received a big pay increase for the latest fiscal year. The executive was paid $42.9 million–including his salary and stock options–for the latest fiscal year that ended on June 30. That is a big increase (66 percent) from the previous year.
As CNBC reminds us, Nadella earned $84.3 million during the fiscal year 2014, which was when he took on the role of CEO following Steve Ballmer.
Nadella’s base salary went up by $1 million to $2.5 million for the latest fiscal year, while his stock awards also improved. Explaining the increases to Nadella’s overall pay package, Microsoft said, “Mr. Nadella’s strategic leadership, including his efforts to strengthen trust with customers, drive for a company-wide culture change, and successful entry and expansion into new technologies and markets.”
Microsoft’s proxy statement explains that it determines pay scales for its executive officers in an effort to “attract, motivate, and retain the key executives who drive our success and industry leadership while considering individual and Company performance and alignment with the long-term interests of our shareholders.”
When determining pay rates, Microsoft’s executive compensation committee looks into a number of factors, including third-party compensation surveys and public data from other, similar companies. Additionally, pay is determined by role and responsibility.
Executives can also receive performance-based bonuses, with different business categories weighted differently, seemingly as a method to motivate executives to hit certain milestones. Given that Nadella’s base salary is $2.5 million, he earns most of his money from stock rewards and other bonuses.
Nadella’s increased pay package comes amid booming business for Microsoft. In 2018, the company temporarily overtook Apple to become the highest-valued pubic company on Earth. Microsoft became a trillion-dollar company in April, and the valuation has stayed that high throughout the year.
Xbox hardware sales are slowing down, but things might turn around in the next year as the company is expected to release a next-generation console with Halo Infinite as a launch title in Holiday 2020.