Satya Nadella
MICROSOFTAbout Satya Nadella
Chairman and CEO of Microsoft since 2021 (CEO since 2014), and a director since 2014; age 58; joined Microsoft in 1992 . Under his tenure, Microsoft more than tripled revenue to $281.7B, quadrupled net income to $101.8B, and quintupled EPS to $13.64 in FY2025, with cumulative TSR >1,500% and market cap rising by almost $3.4T through June 30, 2025 . FY2025 company performance: revenue +15% to $281.7B, operating income +17% to $128.5B, net income +16% to $101.8B, EPS +16% to $13.64 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Microsoft | Chairman and Chief Executive Officer | 2021–present | Combined board and management leadership; oversight of AI strategy and security initiatives via board-leadership structure |
| Microsoft | Chief Executive Officer and Director | 2014–2021 | Led pivot to cloud/AI; outsized TSR and financial expansion cited by board |
| Microsoft | EVP, Cloud and Enterprise | 2013–2014 | Leadership over cloud and enterprise platforms |
| Microsoft | President, Server and Tools | 2011–2013 | Oversaw server/tools product portfolio |
| Microsoft | SVP, Online Services Division | 2009–2011 | Senior leadership in online services |
| Microsoft | SVP, Search, Portal, and Advertising | 2008–2009 | Senior leadership in search/ads |
| Microsoft | Various positions | 1992–2008 | Progressive leadership roles |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Starbucks Corporation | Director (former) | Within past five years | No current public company boards; former Starbucks directorship disclosed |
Fixed Compensation
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Base Salary ($) | 2,500,000 | 2,500,000 | 2,500,000 |
| Bonus ($) | 0 | 0 | 0 |
| Non-Equity Incentive Plan Compensation ($) | 6,414,750 | 5,200,000 | 9,555,000 |
| Target Cash Incentive (FY2025) | Value |
|---|---|
| Target as % of Base | 300% (CEO) |
| Target ($) | 7,500,000 (from 300% target; plan-based awards table) |
Performance Compensation
| Program | Metric | Weight | Target | Actual/Payout | Resulting Payout ($) |
|---|---|---|---|---|---|
| FY2025 Annual Cash Incentive | Financial results | 70% (CEO) | 100% | 117.00% | — |
| Operational results (Security; Product, Customers & Stakeholders; Culture) | 30% (CEO) | 100% | 151.67% | — | |
| Total payout | — | 100% | 127.40% | 9,555,000 |
| Equity Awards | Grant/Period | Structure | Metric Weights | Vesting | FY2025 Notes |
|---|---|---|---|---|---|
| Performance Stock Awards (PSAs) – CEO only | FY2025 target set Sept 16, 2024 | 100% PSAs for CEO; no time-based SAs | Azure & other cloud services 35%; Microsoft Cloud ex-Azure 35%; Consumer Services 15%; Xbox Content & Services 15% | Vest in full after 3-year period; shares earned based on annual metric results across 3 years plus 3-year relative TSR modifier | CEO FY2025 target PSA value: $50,000,000 (unchanged since FY2022) |
| PSA Performance (FY2023 grant, 3-year period FY23–FY25) | FY23–FY25 | Core metrics average 107.68%; 3-year rTSR at 80th percentile → 150% modifier; final payout 161.52% | See left | Vested Aug 31, 2025 | Demonstrates above-target multi-year performance alignment |
| Stock Awards (ASC 718 “Stock Awards $” in SCT) | FY2023–FY2025 | Accounting grant-date fair values for PSAs (and SAs for other NEOs) | — | — | CEO stock awards reported: 2023 $39,236,137; 2024 $71,236,392; 2025 $84,245,496 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership (common shares) | 900,572 shares; less than 1% of outstanding; includes 109,720 in a Grantor Retained Annuity Trust |
| Stock ownership guideline | 15x base salary (CEO); all NEOs, including Nadella, complied in FY2025 |
| Hedging/pledging | Directors and executive officers prohibited from hedging or pledging Microsoft stock; margin purchases/borrowing against MSFT stock also prohibited |
| Clawback policy | “No fault” executive compensation recovery policy covering Dodd-Frank restatements and significant legal/compliance violations; applies to cash and equity (time- and performance-based) |
| Options outstanding | None; Microsoft has not granted options to NEOs since 2003 |
| Shares vested FY2025 | 265,106 shares vested; value realized on vesting $110,586,317 |
| Outstanding and Unearned/Unvested Equity (as of 6/30/2025) | Shares | Market Value ($) |
|---|---|---|
| Stock awards not vested (reflects FY2023 PSA that vested 8/31/2025) | 308,870 | 153,635,027 |
| PSAs unearned (FY2024 grant portion) | 305,100 | 151,759,791 |
| PSAs unearned (FY2025 grant portion) | 119,865 | 59,622,050 |
Note: Market values use $497.41 (MSFT close on 6/30/2025) as disclosed .
Employment Terms
| Topic | Terms |
|---|---|
| Employment agreement | None; NEOs (incl. CEO) do not have employment contracts |
| Change in control (CIC) benefits | None; no payments/benefits following a CIC |
| Severance plan | Eligible under Senior Executive Severance Benefit Plan if terminated without cause: lump-sum 12 months’ base salary + target annual cash incentive; pro-rata target cash incentive for partial year; SAs that would vest in next 12 months continue to vest; after year 1 of PSA performance period, pro-rata PSAs vest up to lesser of target or earned; COBRA contributions and outplacement; no CIC provision; requires release and 12-month non-compete/non-solicit |
| Retirement treatment | Retirement-eligible NEOs (incl. Nadella as of 6/30/2025) continue vesting of certain SAs and pro-rata PSAs if retirement occurs more than one year into the performance period |
| Death/disability | Generally full vesting of SAs; PSAs vest at target |
| Illustrative Payouts if Terminated on 6/30/2025 | Without Cause | Retirement | Death/Disability |
|---|---|---|---|
| Satya Nadella ($) | 183,133,036 | 145,705,316 | 230,620,167 |
Board Governance
- Role and service: Chairman and CEO (elected by independent directors); director since 2014; no board committee memberships .
- Independence: Nadella is not independent; 11 of 12 nominees are independent; independent directors appoint a Lead Independent Director annually .
- Lead Independent Director: Sandra E. Peterson; responsibilities include leading executive sessions; CEO evaluation; CEO succession oversight; agenda control; shareholder engagement; authority to retain advisors .
Director Compensation (as Director)
- Nadella receives no compensation for serving as a director or Board Chairman; director pay structure applies to non-employee directors only .
Compensation Structure Analysis and Signals
- Pay mix and risk: >95% of CEO’s annual target compensation is performance-based; 100% of CEO equity in PSAs (no time-based awards); cash incentives weighted 70% financial/30% operational for CEO; no stock options .
- Metric rigor and relative alignment: PSA metrics are growth-oriented in cloud and consumer services with a 3-year rTSR modifier requiring above-60th percentile to uplift payouts; FY2023 PSA cycle paid 161.52% after 80th percentile rTSR .
- Shareholder support: 2024 say‑on‑pay received over 91% support; FY2025 engagement with shareholders representing ~50% of outstanding shares .
- Peer benchmarking: Two peer groups used (Primary Tech: Adobe, Alphabet, Amazon, Apple, Broadcom, Cisco, IBM, Intel, Meta, Nvidia, Oracle, Qualcomm, Salesforce; Secondary General Industry: Accenture, AT&T, Comcast, Johnson & Johnson, Merck, Netflix, Pfizer, Procter & Gamble, Tesla, Verizon, Walt Disney). Microsoft is materially larger than median peers; compensation not tied to a specific percentile .
Say-on-Pay & Shareholder Feedback
| Item | Result |
|---|---|
| 2024 say‑on‑pay approval | >91% of votes cast supported NEO compensation |
| FY2025 shareholder engagement | Discussions with holders of ~50% of outstanding shares; LID and Comp Committee chair engaged on governance and pay |
Performance & Track Record Highlights
- FY2025 business performance: Revenue $281.7B (+15% YoY); Operating income $128.5B (+17%); Net income $101.8B (+16%); Diluted EPS $13.64 (+16%) .
- Long-term value creation: Since 2014 appointment as CEO, revenue more than tripled; net income quadrupled; EPS quintupled; cumulative TSR >1,500% through 6/30/2025 .
Compensation Committee Oversight
- Composition (FY2025): Carlos A. Rodriguez (Chair), Catherine MacGregor, Sandra E. Peterson, Charles W. Scharf, Emma N. Walmsley .
- Independent consultant: Pay Governance LLC advises the Compensation Committee; consultant independence standards disclosed .
Risk Controls and Red Flags
- No employment agreements; no CIC payments; no golden parachute tax gross‑ups; no executive‑only pension/SERP; no dividends on unvested awards; prohibitions on hedging/pledging; robust clawback policy .
- CEO pay ratio: 480:1 for FY2025 (CEO total $96,496,790 vs. median employee $200,972) .
Equity Grant Details (FY2025)
| Award | Grant Date | Target Shares | Vesting | Accounting/Disclosure Detail |
|---|---|---|---|---|
| CEO PSAs (FY2025 cycle) | 9/16/2024 | 119,864 | Vest after 3‑year period; earned based on multi-year metrics and 3‑yr rTSR | FY2025 SCT “Stock Awards” reflects PSA accounting values; CEO FY2025 SCT stock awards $84,245,496 |
Employment & Contracts Summary
| Provision | Summary |
|---|---|
| Non‑compete / Non‑solicit | 12-month restrictions required to receive severance benefits |
| Auto‑renewal / term | Not applicable; no employment agreement |
| Deferred compensation | CEO had no FY2025 nonqualified deferred comp balances or earnings |
Investment Implications
- Strong pay-for-performance alignment: CEO equity is 100% performance-based PSAs with multi-year growth metrics and a stringent rTSR modifier; FY2023 PSA payout at 161.52% signals robust execution but also embeds continued high performance requirements for future vesting .
- Limited severance/CIC risk: No CIC benefits and standard “12 months base + target bonus” severance with pro-rata equity vesting reduce shareholder dilution risk in change-of-control or separation scenarios; clawback and anti-hedging/pledging add governance discipline .
- Ownership alignment and potential selling windows: Significant unvested PSAs and large vesting events (e.g., Aug 31 cycle) can create periodic supply overhang as awards vest, though ownership policies and anti-pledging rules mitigate misalignment; FY2025 vesting value realized ($110.6M) underscores potential event-driven trading considerations around vest dates .
- Retention considerations: Retirement eligibility (as of 6/30/2025) is offset by sizable unvested performance equity and pro‑rata vesting conditions, supporting retention while preserving performance linkage .