SCIENCE & TECH: Microsoft CEO Satya Nadella gets $30M raise amid layoffs

Microsoft CEO Satya Nadella was awarded a $30 million pay raise — 63% more than what he earned last year — even as the Windows maker slashed its workforce by 2,500 people.

Stock awards for Nadella, who earned $48.5 million in 2023, climbed to about $71 million from $39 million a year earlier, according an SEC filing.

The raise comes after Microsoft shed 1,900 people from its gaming workforce following the company’s $69 billion acquisition of Activision Blizzard.

Months later, it shuttered another gamer firm, Arkane Austin, and handed out pink slips to 650 employees.

Nonetheless, Nadella was rewarded with a significant windfall that would have been higher had it not been for cybersecurity breaches that got the attention of Congress.

Nadella asked for a pay cut that shaved $5.5 million off of his total compensation for fiscal year 2024 because of cyberattacks that rocked the software giant, which the government has alleged can be traced back to Russia and China.

A cash incentive that Nadella was in line to receive, which was tied mostly to revenue and operating income targets, was slashed from $10.66 million to $5.2 million, according to the filing, first cited by CNBC.

Microsoft said in its filing that Nadella asked the company’s compensation committee to take the security breaches into account when determining his pay.

“Mr. Nadella agreed that the Company’s performance was extremely strong, but reflecting on his personal commitment to security and his role as the CEO, asked the Board to consider departing from the established performance metrics and reduce his cash incentive to reflect his personal accountability for the focus and speed required for the changes that today’s cybersecurity threat landscape showed were necessary,” the committee wrote.

Lawmakers in June grilled Microsoft President Brad Smith about the tech giant’s security practices and ties to China a year after alleged China-linked hackers spied on federal emails by hacking the firm.

The hackers accessed 60,000 State Department emails by breaking into Microsoft’s systems in the summer of 2023, while Russia-linked cybercriminals separately spied on Microsoft’s senior staff emails this year, according to the company’s disclosures.

Microsoft, the world’s biggest software-maker, is also a key vendor to the US government and national security establishment.

Microsoft’s business accounts for around 3% of the US federal IT budget, Smith said at the hearing.

Lawmakers grilled Microsoft for its inability to prevent both the Russian and Chinese hacks, which they said put federal networks at risk despite not using sophisticated means.

In May, Nadella circulated a memo to employees titled “Prioritizing security above all else.”

“If you’re faced with the tradeoff between security and another priority, your answer is clear: Do security,” Nadella wrote.

Microsoft said that it would take into account employees’ contributions to cybersecurity when determining compensation.

Despite the hacks, Nadella has delivered for investors. Since Jan. 1, Microsoft’s stock has risen by more than 16% — though it still lags the S&P 500, which has yielded gains of more than 23% year-to-date.

Microsoft is scheduled to report its latest quarterly earnings next week.

The consensus view among Wall Street analysts is that the company notched a 3% year-over-year increase in earnings per share as well as a 14% rise in revenues compared to the same period a year ago.

As of Friday, Microsoft, with a market capitalization of $3.2 trillion, was the third most valuable company in the world behind Nvidia, which leapfrogged Apple.