Thanks to his early success in the almost two years he’s been in the company’s top job, Microsoft CEO Satya Nadella earned $US18.3 million in total compensation during the most recent fiscal year, representing 120% of his target compensation.
In a regulatory filing today, Microsoft released more details on the targets CEO Satya Nadella has to hit if he wants to keep raking in the big money — and it all depends on Windows 10 and the company’s growing cloud business. Over the next several years, Nadella’s bonus and stock awards will increasingly be tied to hitting specific targets in several key Microsoft businesses.
Here are the juicy bits:
In the long lead-up to the release of Windows 10, Microsoft claimed a goal of getting a billion active users on the new operating system in the next two to three years.
Given that Microsoft is already in Fiscal Year 2016, this chart seems to indicate that Nadella’s pay package will be decided by how well it’s doing at that goal. So far, Microsoft is claiming 110 million active Windows 10 devices.
As for Commercial Cloud Annualized Run Rate, that’s a metric that Microsoft has been pushing with the rise of new-generation services like the Microsoft Azure cloud computing platform and Office 365 cloud productivity suite.
Unlike Microsoft’s more traditional software releases, those services are billed as monthly recurring charges, rather than a one-time purchase of boxed software. The “annualized run rate,” or “ARR,” indicates how much money they’re making a year from those subscriptions.
Microsoft needs that number to grow quickly, because Office 365 is cannibalising sales of boxed Microsoft Office software.
Another interesting thing is this look into how Microsoft is changing the way it pays its overall ranks of executives, tying more of their stock awards to performance rather than time on the job:
A Microsoft spokesperson confirms that this is certainly not the first time that the company rewards executive performance with greater compensation.
But Nadella’s Microsoft is seeking to more explicitly tie outperformance with outsized payouts — Nadella himself stands to make more cash depending on if Microsoft gets above the 60th percentile on the S&P 500, per the filing.
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