Microsoft CEO Nadella asked for pay reduction after security slip
cnbc.com
cnbc.com
> Microsoft CEO Nadella asked for pay reduction after security slip, but total comp still rose 63%
> Nadella received $79.1 million for the fiscal year that ended June 30, up from $48.5 million in the prior year, according to a proxy filing Thursday. Most of his pay is in the form of stock. The board’s compensation committee said Nadella asked that the cash incentive portion reflect the security issues.
The ongoing sentiment remains true: There are no real punishments for security failures
I don't believe anyone would ask their boss to cut their already vested RSUs because of a mistake. Especially when those RSUs went up 50% in value.
Yes, there is no real punishment for CEOs anymore. That's why great leaders punish themselves. He beat his KPIs, looked at corporate output, and still rated himself as needs improvement. I respect anyone that does that.
Is it still a punishment if you still end up with a higher compensation compared to previous year?
The standard Nadella is setting is that cash bonuses needs to be determined by cybersecurity impact, and that expectation needs to be in every part of the company. So he cut his (non-discretionary) cash bonus by 50%.
He could've cut his stock package as well, but you're not going to work at a company where meteoric increases in the stock price can be clawed back if your performance was bad. People would freak out and ask if their stock would be cut if a cybersecurity incident occurred.
If we think it’s a symbolic gesture, which it may well be, it is still a gesture that most CEOs would not have made. Unlike most here, I don’t think with this he’s saying please punish me for wrongdoing, but more I take responsibility for this failure (which could have happened many levels below him) and will take the loss personally.
Sounds like HN folks would love for Nadella to completely reduce his salary compared to last year. I don’t know that I agree. I’d say, let’s see you do it.
Because there isn't any loss overall? His compensation went up 63%, what are these losses you're talking about?
If his total compensation actually went down, I'd totally agree with you. But it didn't, which is why I don't understand how this is seen as "great leaders punish themselves".
He did take a loss but not a net loss, so it didn’t go far enough is what I’m sensing?
Thus it’s an empty gesture devoid of any commitments to improve?
For me when I see gestures like this, I’m like oh ok. At some level I know it’s symbolic but it still sends a good signal. It doesn’t scream hypocritical to me.
https://www.levels.fyi/companies/microsoft/salaries/software...
You're solidly upper class if you work at big tech. Nadella isn't trying to lead people making $42,800/year where a 6.5% decrease in salary can literally be the difference in homelessness. He is trying to lead wealthy software developers where $20k is painful but not life-altering.
It's a bigger issue that the median American salary leaves practically no room for someone to cut their income due to performance. If the only way to survive is to constantly lie about your performance to get an extra couple of bucks, people will do that regardless of what the CEO says or does.
Ideally, we would live in society where everyone had slack in their compensation. This would let more CEOs lead by example.
The point is, even people making $241k will feel a 6.5% decrease in pay astronomically more than someone going from $84m to $79m. At that level there is negligible drop in quality of life, and the concept of "cutting back" pretty much does not exist.
This is still a performative act, the intention is nice, but it's performative nonetheless.
Economists assume utility of money is logarithmically proportional to the amount, so losing a certain % of one's wealth hurts the same at every level.[1] Nadella made $84 million and is worth $1.4 billion according to the internet. For a $20k pay cut to hurt the same as a $5 million one, you'd need to have a net worth of x where (5000000/1400000000)x=20000 -> x=$5,600,000. For a $2772 pay cut---which is 6% of the median US salary---to hurt as much, you'd need $776,000 in wealth.
The median net worth is actually more like $192,700. So Nadella would have to give up (2772/192,700)*1400000000=$20 million to feel the pain of the median American giving up 6% of their income. That's quadrice what he actually did give up, but it still wouldn't result in his TC declining, since his pay rose by $30 million this year.
[1]https://economics.stackexchange.com/questions/23952/is-the-u...
Snort! Yes I'm sure he's having to cut-back on eating out and is doing more coupon cutting to makes ends meet.
> In June, Microsoft said it would consider employees’ cybersecurity efforts when determining their compensation.
The reason for the performance, a way of saying "look I'm accountable too!" except not at all.
> Nadella received $79.1 million for the fiscal year that ended June 30, up from $48.5 million in the prior year, according to a proxy filing Thursday. Most of his pay is in the form of stock. The board’s compensation committee said Nadella asked that the cash incentive portion reflect the security issues... It was originally supposed to be $10.66 million, but the full board approved a $5.2 million cash incentive instead.
I personally do believe effective executives are often easily worth their salaries. Not moral worth of course but pure economics. For instance, consider when Nike hired CEO John Donahoe, their stock jumped 10% which was around $16bn. Now either Nike shareholders are stupid (maybe), or the strategic move to appoint Donahoe was worth billions even above his salary of ~$30 million.
Did you literally mean "salaries" here, or total compensation?