Key Points
- Satya Nadella’s total compensation for the 2024 fiscal year rose to $79.1 million, a significant increase from the previous year.
- Nadella requested a reduction in his cash incentive due to recent cyberattacks, leading to a $5.2 million payout instead of $10.66 million.
- Microsoft faced breaches by Chinese and Russian hackers, exposing vulnerabilities in its cloud infrastructure and executives’ email accounts.
- The Department of Homeland Security issued a report highlighting Microsoft’s need to improve its security culture after the breaches.
Microsoft CEO Satya Nadella saw a significant pay raise for the 2024 fiscal year, bringing his total compensation to $79.1 million, up from $48.5 million the previous year. However, the compensation package could have been even higher by $5.5 million if not for a series of cybersecurity incidents. Nadella’s decision to take a reduced cash incentive reflects his acknowledgment of Microsoft’s security challenges over the past year.
Most of Nadella’s compensation comes from stock, but the cash incentive portion, tied to performance metrics like revenue and operating income, was initially set at $10.66 million. However, Nadella asked the board’s compensation committee to reduce the amount in light of the cybersecurity issues that impacted Microsoft. As a result, the board approved a cash incentive of $5.2 million instead.
The reduction followed several high-profile cyberattacks that raised concerns about Microsoft’s security practices. In July 2023, Microsoft disclosed that Chinese hackers had breached U.S. government officials’ email accounts by exploiting vulnerabilities in Microsoft’s cloud infrastructure. This incident led the U.S. Department of Homeland Security to release a report in April 2024 detailing the breach, calling for improvements to Microsoft’s security culture. Earlier in January, it was revealed that Russian intelligence had also accessed the email accounts of several top Microsoft executives.
In response to these breaches, Nadella told employees in a May memo that the company would prioritize security above all else. He committed to revamping Microsoft’s cybersecurity practices and taking personal accountability for the company’s security posture. By June, Microsoft announced it would factor cybersecurity efforts into employee compensation, demonstrating its increased focus on addressing these challenges.
Despite the security setbacks, Microsoft’s overall financial performance remained strong. The company’s security business generated over $20 billion in revenue in 2022, surpassing the total revenue of many standalone security companies.
Nadella’s decision to take a pay cut underscores his commitment to improving Microsoft’s security efforts in light of the growing cybersecurity threat landscape. The company’s response to these incidents will likely shape its approach to security in the future.
