Shareholders Will Probably Hold Off On Increasing Microsoft Corporation's (NASDAQ:MSFT) CEO Compensation For The Time Being

Key Insights

• Microsoft to hold its Annual General Meeting on 5th of December
• CEO Satya Nadella's total compensation includes salary of US$2.50m
• Total compensation is 392% above industry average
• Microsoft's EPS grew by 15% over the past three years while total shareholder return over the past three years was 95%

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Under the guidance of CEO Satya Nadella, Microsoft Corporation (NASDAQ:MSFT) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 5th of December. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Microsoft

How Does Total Compensation For Satya Nadella Compare With Other Companies In The Industry?

At the time of writing, our data shows that Microsoft Corporation has a market capitalization of US$3.6t, and reported total annual CEO compensation of US$96m for the year to June 2025. Notably, that's an increase of 22% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$2.5m.

In comparison with other companies in the American Software industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$20m. This suggests that Satya Nadella is paid more than the median for the industry. What's more, Satya Nadella holds US$435m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Satya Nadella as compared to non-salary compensation over the one-year period examined. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Microsoft Corporation's Growth Numbers

Over the past three years, Microsoft Corporation has seen its earnings per share (EPS) grow by 15% per year. Its revenue is up 16% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Microsoft Corporation Been A Good Investment?

Most shareholders would probably be pleased with Microsoft Corporation for providing a total return of 95% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Microsoft primarily uses non-salary benefits to reward its CEO. Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Microsoft that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.