Microsoft CEO Satya Nadella just received a large cash bonus for Microsoft for exceeding most of his needed milestones during the company's 2016 fiscal year. However, he didn't quite get all of the bonus money he was eligible to receive.


In a new filing with the U.S. Securities and Exchange Commission (via Business Insider), Microsoft revealed that Nadella got $4,464,000 in bonus money thanks to the company's evaluation of his performance. That number was 124% of his target bonus, which means that Microsoft's board of directors think he's doing a very good job leading the company. Overall, Nadella got $17,692,031, including his base salary and stock options, during Microsoft's last fiscal year that ended on June 30. That's actually down from the $18.3 million he got in 2015. BI points out that Microsoft's chief financial officer Amy Hood and President Brad Smith hit 140% of their target bonuses.

Microsoft stated in the SEC filing what Microsoft's Board of Directors considers in their evaluation of Nadella's performance:

  • A comprehensive review of the Company's and Mr. Nadella's performance across a series of factors listed below under "Performance review process for other Named Executives;"
  • Input from Microsoft's senior executives about Mr. Nadella's leadership;
  • Mr. Nadella's evaluation of Microsoft's and his individual performance over the past fiscal year;
  • The Company's performance relative to other technology companies;
  • Input from the Compensation Committee's compensation consultant;
  • The Board's assessment of Mr. Nadella's performance during the year.

While the board gave mostly high marks to Nadella, the filing does show some elements in the company's performance that could have kept Nadella from reaching that 140% bonus amount. It states that "revenue was slightly below target due to our change in phone strategy" and also that "Windows 10 MAD fell short of expectations for the year, in part because of the change in phone strategy, pushing the goal to achieve 1 billion Windows 10 MAD beyond fiscal year 2018." It added that "mobile devices fell short of plan and execution against competitors could have been, stronger."

Having said that, Microsoft also stated in the filing that the decision by Nadella to cut back on its mobile phone strategy "allowed the Company to fund more strategic priorities". It added, "Mr. Nadella's decision to streamline the phone hardware business created the opportunity to reprioritize assets to growth areas." It also saw growth in its Office 365 and commercial cloud business, and on the consumer side it stated that "Xbox Live users grew 33%, and the Cortana Search box exceeded 100 million monthly users."

Nadella also got credit for keeping employee confidence in Microsoft high, according to the filing:

Mr. Nadella made very significant progress developing and asserting the aspire-to culture for the Company, and driving that culture change leading to a new sense of purpose at the Company. Regular employee sentiment polls demonstrate increased awareness of and belief in key cultural pillars (increased 12 to 14 points year over year). Employee sentiment on company direction and confidence in the leadership team remained very high. Mr. Nadella made decisions on people and processes that contributed significantly to building a strong leadership team and robust results in recruiting. He played a leading role in transitioning to more performance-based pay for the senior leadership team.

Do you think Nadella is doing a good job in leading Microsoft? Let us know your thoughts in the comments!