Microsoft doubles budget for pay increases, raises stock option

Padma Bhushan: Satya Nadella and Sundar Pichai were named in the “trade and industry” category.

In an effort to prevent its workers from leaving for competitors, such as Amazon and Google, Microsoft has announced that it will nearly double its budget for merit-based employee pay increases. The company said it will also increase its annual stock options by 25 percent.

The good news for Microsoft employees was confirmed by CEO Satya Nadella, in an internally circulated email. The email is obtained via GeekWire.

“Time and time again, we see that our talent is in high demand, because of the amazing work you do to empower our customers and partners. Among the leadership team, your impact is both recognised and deeply appreciated — and, for that, I want to say a big thank you. That’s why we’re making long-term investments in each of you.”

"Specifically, we are nearly doubling the global merit budget. Merit budgets will vary by country, based on local market data, and the most meaningful increases will be focused where the market demands and on early to mid-career levels. We are also increasing annual stock ranges by at least 25 percent for all levels 67 and below."

The phrase “levels 67 and below” refers to employees up to the level of senior directors. Employees who have reached what Microsoft defines as the ‘partner’ level — including general managers, vice presidents and other higher-ranking executives — are not the focus of Nadella’s memo.

The move comes as the company’s 2022 fiscal year draws to a close, ending on June 30, and before its timeline for deciding rewards-based compensation in the fall.

Microsoft is allocating more money to people who are in the middle of their career, much like other big tech companies across the world who have been hiking the salaries of their staff in order to retain top talents.

The hike follows an internal company poll which indicated only 66 percent of employees believed that they get a 'good deal at Microsoft', when it comes to salaries and their own self-worth.

Furthermore, back in February, Amazon also announced a massive pay hike. They doubled the maximum base pay from $1,60,000 to $3,50,000 for corporate and tech employees. Google began the year by hiking the salaries of four of its top executives, who included Chief Financial Officer Ruth Porat, Senior Vice President Prabhakar Raghavan (in charge of Google search), Senior Vice President and Chief Business Officer Philipp Schindler, and Kent Walker, President of Global Affairs and Chief Legal Officer. From $650,000, their base salaries were bumped to $1 million.

The remuneration, no doubt in response to the current labour market, would be essential in recruiting top talent and retaining existing employees.

Computing fields have also broadened and become progressively competitive in the worlds of cyber security, artificial intelligence, metaverse and cloud computing, leading to a high-scale demand of engineers, techies, and other experts.