We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Microsoft Corporation's (NASDAQ:MSFT) CEO For Now

Key Insights

• Microsoft's Annual General Meeting to take place on 10th of December
• Salary of US$2.50m is part of CEO Satya Nadella's total remuneration
• Total compensation is 480% above industry average
• Microsoft's EPS grew by 11% over the past three years while total shareholder return over the past three years was 32%

Under the guidance of CEO Satya Nadella, Microsoft Corporation (NASDAQ:MSFT) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 10th of December. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Microsoft

Comparing Microsoft Corporation's CEO Compensation With The Industry

At the time of writing, our data shows that Microsoft Corporation has a market capitalization of US$3.2t, and reported total annual CEO compensation of US$79m for the year to June 2024. That's a notable increase of 63% on last year. 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$14m. This suggests that Satya Nadella is paid more than the median for the industry. Furthermore, Satya Nadella directly owns US$371m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	US$2.5m	US$2.5m	3%
Other	US$77m	US$46m	97%
Total Compensation	US$79m	US$49m	100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Investors may find it interesting that Microsoft paid a marginal salary to Satya Nadella, over the past year, focusing on non-salary compensation instead. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied 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 11% per year. It achieved revenue growth of 16% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Microsoft Corporation Been A Good Investment?

With a total shareholder return of 32% over three years, Microsoft Corporation shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Microsoft prefers rewarding its CEO through non-salary benefits. Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Microsoft that you should be aware of before investing.

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.