Microsoft Corporation (MSFT) Update: CEO Nadella’s Compensation Reasonable

Microsoft (MSFT)

Microsoft Corporation (NASDAQ:MSFT) has issued its stance on the issue of its CEO being overpaid. A spokesman from the software products and services company has told Business Insider that ISS’ claim that Microsoft CEO Satya Nadella’s pay is too high is misleading, because the company will base Nadella’s pay, which includes stocks ownership, on company performance during his tenure.

ISS (Institutional Shareholder Services) is known to wield influence over hedge fund, pension fund, and mutual fund managers and has stated in a recent advisory note  issuance urging Microsoft top investors to question Nadella’s pay package for 2014 in a non-binding vote in an annual meeting of Microsoft Corporation (NASDAQ:MSFT) next month. The ISS  argued  that Nadella got a $91 million worth of starting package in cash and restricted stock.

Microsoft (MSFT)Nadella, who has been serving as Microsoft’s CEO beginning February of this year, has been instrumental in the company’s gains over the past few months, particularly in the cloud market. In an interview with CNBC, he said that Microsoft Corporation (NASDAQ:MSFT) is now one of the three companies that have proven capabilities in the cloud market. He added that it is also the only company that operates a public cloud infrastructure in China, one of those areas that he says requires hard work. Nadella is also credited with the release of Microsoft Office Software versions for Apple and Google devices.

Under his compensation package with Microsoft, Nadella will not have the stocks credited to his name until five to seven years from now, and the shares he will receive will also depend on stock performance. More specifically, he is set to have 600,000 shares in 2019, 2020, and 2021 on condition that Microsoft outperforms 60% on S&P index. A 50% beat in any of those years reduces Nadella’s share to 450,000. A 30% beat on the other hand, translates to 150,000 shares in a year.

In its report, Business Insider cites an unnamed Microsoft Corporation (NASDAQ:MSFT) spokesperson as saying that compared to CEOs of other companies, Nadella is not overpaid at all. As a reference, the said spokesperson noted that the annualized salary of Tim Cook from Apple Inc.(NASDAQ:AAPL) is $40.4 million, that of Eric Schmidt from Google Inc (NASDAQ:GOOG) is $32.9 million, while that of Marissa Mayer of Yahoo! Inc.(NASDAQ:YHOO) is $23.4 million.

This article has been written by Nonito Guntan.

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