Microsoft has confirmed CEO Satya Nadella will receive total compensation worth $96.5 million for fiscal year 2025, marking a 22% rise from the previous year.
The package includes a $2.5 million base salary and $84 million in stock awards, with most of his pay tied to performance rather than tenure.
The company explained Nadella’s equity compensation is delivered “exclusively through performance stock awards tied to long-term value creation” and not time-based rewards.
AI growth meets financial pressure
Microsoft says this structure is meant to “encourage his continued leadership and drive sustained business growth and shareholder value.”
The board justified the increase by pointing to Microsoft’s strong financial performance under his tenure, with revenue tripling and net income quadrupling since 2014.
The company’s results for the fiscal year ending June 30 2025 reflect this trajectory.
Microsoft reported revenue of $281.7 billion and a net profit of $101.8 billion, with its cloud storage and AI businesses leading the surge.
Azure revenue surpassed $75 billion, climbing 34% year on year, while the company said it now operates “70 operating regions and over 400 data centers” worldwide.
Microsoft also claims “430 million M365 Commercial paid seats,” “89 million M365 consumer subscribers,” and “1.2 billion LinkedIn members.”
Yet, behind these figures lies a growing question: can the company’s expanding focus on AI tools continue to fund its enormous compensation packages?
The contrast between Nadella’s soaring pay and Microsoft’s internal cost-cutting is difficult to ignore.
Just months before the pay announcement, the company eliminated up to 9,000 jobs, leaving remaining employees with a median annual salary of $200,972.
Microsoft disclosed that for 2025, “the ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 480 to 1.”
Despite record profits, such disparity may fuel skepticism about whether the firm’s AI-driven strategy is truly benefiting its broader workforce.
Microsoft continues to invest heavily in artificial intelligence, with 230,000 organizations reportedly using Copilot Studio and 14,000 customers linked to its Azure AI Foundry service.
However, the company has not confirmed how many of those customers are paying, leaving analysts uncertain about the long-term return on these ventures.