Compared To Apple And Yahoo, Are they Overpaying the New CEO (MSFT)?
With Nadella, Microsoft has crafted a brand new pay-for-performance model.
Investor watchdog organization Institutional Shareholder Services (ISS) caused a stir last week by telling Microsoft investors that Satya Nadella’s pay package was too high.
Nadella was granted a starter kit of stock valued at about $65 million which won’t begin to vest until 2019. Plus, he got another one-time stock grant worth $13.5 million in August 2013 to keep him around during the CEO search process. It vests over seven years.
In 2014, his base salary is $918,917 for a role he assumed in February. (ISS calculates his full year base at $1.2 million) and a cash bonus of $3.6 million.
So Nadella will be eligible for an annual $13.2 million stock award, with a complicated vesting schedule, that he’ll unlock if he hits certain performance targets.
“Over 80% of the reward opportunity is performance-based measured by our total shareholder return (“TSR”) relative to the S&P 500. To earn the target value of this award, Microsoft’s TSR must exceed the 60th percentile of the S&P 500 over each of three overlapping five-year performance periods that extend to 2021
By the way, Microsoft also agreed to a $17.4 million golden parachute.
- Oracle is paying its new co-CEOs Safra Catz and Mark Hurd $37.7 million apiece for their first year. That was a pay cut from $44 million the year before. (Larry Ellison is making $67 million in 2014).
- Tim Cook was granted a staggering $378 million one-time stock grant when he took over as CEO, which has vastly grown in value. Between a $4 million salary and about $70 million of his stock options that vested, he made $74 million in 2013.
- Marissa Mayer was paid $36.6 million her first year as the CEO of Yahoo.