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As Microsoft CEO, Nadella Gets Big Pay Raise, Stock Grants

Nadella will also get a one-time stock award and be eligible for up to $3.6 million in cash bonuses each year.


Naturally, Satya Nadella is getting a big raise now that he is Microsoft’s CEO.

His base salary will jump to $1.2 million per year, and he’ll be eligible for an annual cash bonus of anywhere from nothing to $3.6 million, and a stock award of $13.2 million for fiscal 2015, according to documents filed Tuesday with the Securities and Exchange Commission.

Nadella will also get a one-time long-term stock award tied to Microsoft’s stock performance in the coming years that, all told, could net up to $98 million, making Nadella among the more richly compensated tech executives.

Here’s the full text of the pay portion of Nadella’s offer letter, which was included in the SEC filing.

Salary: Mr. Nadella’s annual salary rate will increase to $1,200,000.

Ongoing Incentive Compensation: Mr. Nadella will participate in the Company’s Executive Incentive Program (“EIP”) as it may be in effect from time to time. There are currently two components of the EIP:

EIP Cash Award: For the remainder of fiscal year 2014 and all of fiscal year 2015, Mr. Nadella’s annual cash award target under the EIP will be 300% of his salary earned as CEO during the applicable period. The actual cash award can be from 0% to 300% of the target.

EIP Stock Award: For the Company’s 2015 fiscal year, on an annualized basis Mr. Nadella’s EIP stock award will be $13,200,000.

One-Time Stock Award: In connection with his appointment, Mr. Nadella will receive a one-time stock award in the form of Long-Term Performance Stock Awards (“LTPSAs”). One-third of the LTPSAs will be earned based on the Company’s total shareholder return relative to the S&P 500 over each of three overlapping, five-year performance periods beginning on the grant date and the first and second anniversaries thereof. The number of LTPSAs that will vest at the end of the applicable performance period will be determined according to the schedule set forth in the Offer Letter, with a relative total shareholder return at the sixtieth (60th ) percentile required for a target level earn-out of 600,000 LTPSAs per performance period.

*Updated to reflect size of overall compensation package.

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