Satya Nadella earned $96.5M in fiscal 2025, driven mainly by equity awards
Microsoft CEO pay tied mainly to equity; board links awards to performance
Company cites AI-led growth and Azure strength as justification for grant
Equity portion ~$84M, cash incentives ~$9.5M, prompting shareholder scrutiny and governance debate
Microsoft disclosed in its annual proxy filing that CEO Satya Nadella earned $96.5 million for fiscal 2025, a roughly 22% increase from the prior year. This is his largest package since becoming CEO, with the bulk of the rise tied to stock awards the board says reflect strong company performance amid an AI-led surge.
The filing shows most of Nadella’s pay came in the form of equity. He received roughly $84 million in stock awards, plus about $9.5 million in cash incentives and a base salary that remains a small share of the total.
The board emphasised that the vast majority of the award is performance-based and linked to shareholder returns.
AI Strategy
Microsoft’s board said Nadella and his leadership team had positioned the company as a clear leader in generative AI, a shift the compensation committee referenced when awarding the larger grant.
Microsoft’s shares have risen strongly in 2025, roughly 23% year-to-date, helping amplify the value of equity awards tied to stock performance.
The proxy filing accompanies a period of robust cloud and enterprise demand, driven in part by Azure growth and Copilot adoption, which the board cited in evaluating leadership performance. Senior executives saw pay increases as well; the filing discloses higher compensation for top lieutenants including the CFO and new commercial chief.
Resonance & Concerns
The payout comes after a year of cost-cutting at Microsoft (including large headcount reductions) and amid heightened shareholder scrutiny about AI risks and executive pay. Proxy statements this season have included shareholder proposals and debates over AI governance, making high CEO pay a potential flashpoint with investors and employees.
Investors will watch Microsoft’s upcoming quarterly results and commentary on AI investments and margins, which the company is scheduled to report in late October, metrics that will shape whether shareholders see the pay package as justified by sustained performance.
Other near-term signals include any shareholder votes on executive compensation and how Microsoft balances AI spending with margin targets.
