Why Microsoft’s CEO Cut His Pay After Major Hacks

Microsoft’s CEO, Satya Nadella, took a significant step last year. He decided to reduce his pay despite the company’s fantastic financial performance. This bold move came after a series of serious cyberattacks hit Microsoft. It’s like he said, “Hey, I’m the boss, and it’s my responsibility to make sure our security is top-notch. ” Nadella’s total pay for the last fiscal year was a whopping $79. 1 million, a 63% increase from the previous year. Most of this came from stock awards worth $50 million. However, his cash incentive was only $5. 2 million, which is less than half of what he could have received based on the company’s performance. This decrease happened because Nadella believed he needed to take personal accountability for the cybersecurity issues. Microsoft faced several major cyberattacks in 2023 and early 2024. In April, hackers known as Storm-558, from China, compromised the emails of more than 500 people, including high-ranking U. S. government officials. A report from the U. S. Cyber Safety Review Board revealed that this attack could have been prevented if Microsoft had prioritized security investments and risk management.Earlier this year, in January, Microsoft’s corporate email systems were attacked by Midnight Blizzard, a group backed by the Russian government. In March, the company found evidence that these hackers had gained access to its internal systems using stolen information. In response to these attacks, the compensation committee for the upcoming fiscal year added a new category for executive pay based on cybersecurity performance. They also aimed to tie leadership compensation more closely to the company’s goals in artificial intelligence. More than 95% of Nadella’s compensation is performance-based. Typically, 70% of the annual cash incentive is linked to meeting financial targets. Given that Microsoft’s shareholder returns were 32%, Nadella was eligible for a payout of over 138% of the initial target.