- Microsoft’s wealth creation increasingly favors shareholders over its shrinking workforce
- AI investments generate record revenue even as job security declines across divisions
- Microsoft’s success now rests largely on the uncertain economics of artificial intelligence
Microsoft has confirmed that CEO Satya Nadella will receive total compensation worth $96.5 million for fiscal year 2025, up 22% from the previous year.
The package includes a base salary of $2.5 million and $84 million in stock awards, with most of his pay tied to performance rather than tenure.
The company explained that Nadella’s stock compensation is delivered “exclusively through performance stock awards tied to long-term value creation” and not time-based rewards.
AI growth faces economic pressure
Microsoft says this structure is intended to “encourage his continued leadership and drive sustained business growth and shareholder value.”
The board justified the increase by pointing to Microsoft’s strong financial performance during his tenure, tripling revenue and quadrupling net income 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 profit of $101.8 billion, with its cloud storage and AI businesses leading the way.
Azure revenue topped $75 billion and rose 34% year-over-year, while the company said it now operates “70 operating regions and over 400 data centers” worldwide.
Microsoft also claims “430 million M365 Commercial paid seats,” “89 million M365 consumer subscribers,” and “1.2 billion LinkedIn members.”
Still, behind those numbers lies a growing question: can the company’s growing focus on AI tools continue to fund its huge compensation packages?
The contrast between Nadella’s sky-high salary and Microsoft’s internal cost-cutting is hard to ignore.
Just months before the pay announcement, the company eliminated up to 9,000 jobs, leaving the remaining employees with an average annual salary of $200,972.
Microsoft revealed that by 2025, “the ratio of the annual total compensation of our CEO to the annual total compensation of the median employee was 480 to 1.”
Despite record profits, such differences could raise skepticism about whether the company’s AI-driven strategy is really benefiting its wider workforce.
Microsoft continues to invest heavily in artificial intelligence, with 230,000 organizations reportedly using Copilot Studio and 14,000 customers tied to its Azure AI Foundry service.
However, the company has not confirmed how many of these customers are paying, leaving analysts uncertain about the long-term returns on these ventures.
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