- Microsoft's wealth creation increasingly prioritizes shareholders over workforce reduction
- AI investments generate record returns even as job security declines across the board
- Microsoft's success now depends largely on the uncertain economics of artificial intelligence.
Microsoft confirmed that CEO Satya Nadella will receive total compensation of $96.5 million for fiscal 2025, up 22% from the previous year.
The package includes a base salary of $2.5 million and bonuses of $84 million, with most of his salary tied to performance rather than tenure.
Company explained Nadella's equity compensation is “solely through equity-based performance awards linked to long-term value creation” rather than time-based awards.
AI growth faces financial pressure
Microsoft says the structure is designed to “encourage his continued leadership and drive sustainable business growth and shareholder value.”
The board justified the raise by pointing to Microsoft's strong financial performance during his tenure, with revenue tripling and net income quadrupling since 2014.
The company's results for the fiscal year ending June 30, 2025 reflect this trajectory.
Microsoft reported revenue of $281.7 billion and net income of $101.8 billion. cloud storage and artificial intelligence companies are leading this surge.
Azure revenue topped $75 billion, up 34% year over year, with the company saying it now manages “70 operating regions and more than 400 data centers“all over the world.
Microsoft also claims “430 million M365 commercial paid seats,” “89 million M365 consumer subscribers,” and “1.2 billion LinkedIn members.”
However, behind these numbers lies a growing question: can the company expand its focus to Artificial Intelligence Tools continue to fund their huge compensation packages?
The contrast between Nadella's rising salary and Microsoft's internal cost-cutting is hard to ignore.
Just a few months before the announcement of the payment, the company cut up to 9,000 jobsleaving the remaining employees with an average annual salary of $200,972.
Microsoft said that in 2025, “the ratio of our CEO's total annual compensation to the median employee's total annual compensation was 480 to 1.”
Despite record profits, the disparity could fuel skepticism about whether the company's AI-driven strategy is truly benefiting its broader workforce.
Microsoft continues to invest heavily in artificial intelligence, with 230,000 organizations reportedly using Copilot Studio and 14,000 customers connected to its Azure AI Foundry service.
However, the company has not confirmed how many of these customers are paying, leaving analysts unsure about the long-term profitability of these businesses.
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