What Microsoft CEO Nadella Salary Has in Common with Engineer Pay

In a bid for more compensation transparency, a group of Microsoft employees have taken to listing their salaries in a Google spreadsheet circulated internally. While even entry-level engineers and developers at the company make quite a bit of money, the amounts pale in comparison to what their CEO, Satya Nadella, pulls down in an average year. Let’s take a look at the company’s whole compensation stack.

According to OneZero, the 310 employees who contribute to the spreadsheet tend to skew younger. Their crowdsourced data places total compensation for entry-level engineers and program managers at $125,665. “A vast majority (87 percent) of that will come from an average base salary of $111,096, with an average cash award of $10,701 and stock award of $3,867,” the publication added. 

As Microsoft employees rise in the ranks, the proportion of compensation from base salary begins to decline, with stock and cash bonuses growing ever-richer: “At level 64, which includes only 11 of the respondents, salary counted for only 72 percent of an average total compensation of $234,249.”

Although the sheet quoted by OneZero has a fairly small sample size, this core assertion about base salary relative to stock and cash bonuses is supported by data from levels.fyi, which offers crowdsourced estimates of salaries for software engineers at various technology companies. Here’s their Microsoft breakdown, from entry-level SDE to fairly senior level (67):   

This favoring of stock over base compensation extends all the way up the chain to CEO Satya Nadella. For the 2019 fiscal year, Nadella made $42.9 million, up year-over-year from $25.8 million. Given that his base salary was $2.3 million, the bulk of his compensation came from stock. While it’s safe to say that Nadella’s compensation handily outpaces that of even the most senior engineers at his company, it nonetheless follows a well-established trend throughout the organization

Nadella isn’t an anomaly when it comes to tech-executive pay structure. For example, Google CEO Sundar Pichai made “only” $2 million in base salary in 2019—but earned $280.6 million overall thanks to equity in his company. Indeed, Pichai has earned nearly $1 billion in stock grants over the past decade, putting him in the same league as Apple CEO Tim Cook, whose own stock holdings have made his estimated net worth exceed $1 billion (Cook’s actual salary was $3 million in 2019). 

When a company’s stock is on the rise (along with its profits), that kind of outsized compensation might seem justified. For many technologists on the management track, that kind of supersized payday is also a goal to aspire to—although few have a realistic shot at reaching it. However, technologists who specialize, particularly in cutting-edge arenas such as machine learning and artificial intelligence (A.I.), have a pretty good shot at making many millions over the course of their career, provided they take a portion of their compensation in stock that actually does well over the long term. Keep that in mind when plotting your career trajectory.   

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