Satya Nadella details Microsoft plan for ‘significant additional investment’ in employee compensation

Microsoft CEO Satya Nadella. (GeekWire File Photo)

Microsoft plans to nearly double its global budget for merit-based salary increases, and increase its range for annual stock-based compensation by at least 25% for employees at the senior director level and below.

The move, detailed by Microsoft CEO Satya Nadella in an email to employees Monday morning, represents an attempt to keep its compensation competitive in a tough market for tech talent, and a broader environment of inflation.

It follows Amazon’s decision to more than double its maximum base pay range for corporate and tech workers.

“Time and time again, we see that our talent is in high demand, because of the amazing work you do to empower our customers and partners,” Nadella writes in the memo, a copy of which was obtained by GeekWire. “Across the leadership team, your impact is both recognized and deeply appreciated — and for that I want to say a big thank you. That’s why we’re making long-term investments in each of you.”

Nadella writes in the memo that the company is making “a significant additional investment in our compensation programs” beyond its normal budget for annual compensation increases. Here’s how he describes the changes:

“Specifically, we are nearly doubling the global merit budget. Merit budgets will vary by country, based on local market data, and the most meaningful increases will be focused where the market demands and on early to mid-career levels. We are also increasing Annual Stock ranges by at least 25 percent for all levels 67 and below.”

The reference to “levels 67 and below” translates generally into employees up to and including senior directors. That means those who have reached what Microsoft calls the “partner” level — including general managers, vice presidents and other higher-ranking executives — are not the focus of Nadella’s email.

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Microsoft is making the move as its 2022 fiscal year draws to a close, ending June 30, and before its timeframe for determining rewards-based compensation in the fall.

The company reported stock-based compensation expense of $6.1 billion in its last fiscal year, ended June 30, 2021, equivalent to 10% of its $61 billion in annual profits.

Insider first reported on impending Microsoft compensation increases last week.

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