- Microsoft’s wealth creation increasingly favors shareholders over its shrinking workforce
- AI Investments Drive Record Revenue Even as Job Security Declines Across Divisions
- Microsoft’s success now depends heavily on the uncertain economics of artificial intelligence
Microsoft has confirmed that CEO Satya Nadella will receive total compensation worth $96.5 million for fiscal 2025, a 22% increase from the previous year.
The package includes a base salary of $2.5 million and $84 million in stock awards, with most of his salary tied to performance rather than tenure.
The company explained that Nadella’s equity compensation is provided “exclusively through performance equity awards tied to long-term value creation” and not time-based rewards.
AI growth faces financial pressure
Microsoft says this structure is intended to “foster its 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, 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 profit of $101.8 billion, with its cloud storage and artificial intelligence businesses leading the rise.
Azure revenue surpassed $75 billion, increasing 34% year-over-year, while the company said it now operates “70 operational regions and more than 400 data centers” around the world.
Microsoft also claims “430 million paid M365 business seats,” “89 million M365 consumer subscribers,” and “1.2 billion LinkedIn members.”
Behind these numbers, however, lies a growing question: Can the company’s increased focus on AI tools continue to fund its huge compensation packages?
The contrast between Nadella’s salary increase and Microsoft’s internal cost reduction is hard to ignore.
Just months before the salary announcement, the company eliminated up to 9,000 jobs, leaving remaining employees with an average annual salary of $200,972.
Microsoft revealed that by 2025, “the ratio of our CEO’s annual total compensation to the average employee’s annual total compensation was 480 to 1.”
Despite record profits, such disparity may fuel skepticism about whether the company’s AI-powered strategy is actually benefiting its workforce overall.
Microsoft continues to invest heavily in artificial intelligence, with 230,000 organizations reportedly using Copilot Studio and 14,000 customers linked to its Azure AI Foundry service.
However, the company has not confirmed how many of those customers are paying, leaving analysts unsure about the long-term return of these companies.
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