In 2022, that was $2.5 million. Microsoft’s CEO base salary varied over the years, increasing from $1.5 million in 2018 to $2.5 million in 2022. However, it’s essential to notice that most of the CEO’s compensation is performance-based and goes beyond the base salary. For instance, in 2022, of the total compensation for Satya Nadella, the current CEO of Microsoft, only 4% was base salary.
Indeed, for top executives, the real earning potential is not in the base salary but rather in the stock awards and other performance-based compensations.
For instance, in the specific case of Microsoft, the CEO pay mix has been increasingly skewed toward performance.
For instance, in 2021, 71% of the CEO’s compensation was performance-based; in 2022, this number increased to 96%!
Thus, top executives at large tech companies can get wealthy via stock compensation.
Yet, it’s important to remark that, often, these top executives can’t just sell the stock awards.
Still, they have a schedule for it (vesting period), which can vary depending on the company’s compensation structure.
For instance, Microsoft requires its executives to keep at least a stock ownership for the company’s stock that goes between 8 to 15 times their base salary.
In addition, CEOs often can’t just sell the majority of their stake into the company, as this would be a wrong signal to the market.
Thus, the CEO might opt for scheduled sales of the stocks, which are cashed over the years.
Take the case of Steve Ballmer, who, after decades at Microsoft and after becoming CEO, by 2014, when he stepped down, he had a 4% of Microsoft, which today is worth $83 billion!
It’s worth to emphasize that this compensation is not actual cash, but it’s paid out as stocks that can be vested (sold) in a multi-year timeline.
For instance, for Google, this timeline is for three years at least.
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