Satya Nadella has been appointed the new CEO of Microsoft, after a lot of wait and anticipation. Given Microsoft‘s history with CEOs, he is here to stay for a long while. And a look at the extensive and substantial compensation package he’s been promised confirms that.
Nadella is the third CEO in the four-decades long history of Microsoft and like his predecessors, he’s an all-rounder with many accomplishments under his belt. He is expected to stay for a long while as the head of the company, directing the key decisions in the coming years.
Naturally, his compensation package is a cause for a lot of interest and intrigue in the tech circles and TechCrunch has been so kind as to break it down in detail for us. According to the site, Nadella will be handed a $1.2 million cash salary each year together with a bonus of up to 300% of his salary and a target stock bonus of $13.2 million during 2015. The bonuses are obviously tied to his performance, and that of the company’s.
But that’s not it. Nadella will also bag stock shares based on Microsoft’s performance in three five-year periods. These are 2014 – 2019, 2015, 2020 and 2016 – 2021. The minimum he is supposed to do is to ensure that Microsoft remains in the 60th percentile of the S&P 500’s performance index. If this is achieved, he will get 600,000 shares for each of the three periods. If he performs even better and the company is catapulted to the 80th percentile, he gets 900,000 shares for each period.
In the best case scenario, if he gets the promised 900,000 stock shares for each period, that totals up to 2.7 million shares. At the present value of Microsoft’s shares, that’s nearly $98 million but since the company’s stock is expected to appreciate if all goes well for Nadella, the amount will top that figure.
In all, this is one of the best compensation packages being offered to a tech CEO right now. But then, Nadella has a huge job ahead of him. In a rapidly changing tech environment, he has to keep Microsoft the dominant desktop OS-maker, bring greater success for the company in the increasingly significant mobile arena and sustain other products and services to the path of success. Mighty tough job, we would say, but well-rewarded too.