Shareholders May Be More Conservative With Microsoft Corporation's (NASDAQ:MSFT) CEO Compensation For Now
CEO Satya Nadella has done a decent job of delivering relatively good performance at Microsoft Corporation (NASDAQ:MSFT) recently. As shareholders go into the upcoming AGM on 30 November 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.
Check out our latest analysis for Microsoft
Comparing Microsoft Corporation's CEO Compensation With the industry
At the time of writing, our data shows that Microsoft Corporation has a market capitalization of US$2.6t, and reported total annual CEO compensation of US$50m for the year to June 2021. That's a notable increase of 12% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$2.5m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. This suggests that Satya Nadella is paid more than the median for the industry. What's more, Satya Nadella holds US$535m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2021 | 2020 | Proportion (2021) |
Salary | US$2.5m | US$2.5m | 5% |
Other | US$47m | US$42m | 95% |
Total Compensation | US$50m | US$44m | 100% |
Talking in terms of the industry, salary represented approximately 12% of total compensation out of all the companies we analyzed, while other remuneration made up 88% of the pie. Microsoft pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Microsoft Corporation's Growth
Microsoft Corporation's earnings per share (EPS) grew 55% per year over the last three years. Its revenue is up 20% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Microsoft Corporation Been A Good Investment?
We think that the total shareholder return of 230%, over three years, would leave most Microsoft Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Microsoft that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
