Microsoft May Boost Merit Raises, Stock in Bid to Compete for Talent

Microsoft is preparing to raise many of its technologists salaries’ considerably, in a bid to keep the company’s compensation competitive with that of its giant rivals.

In an email to employees, Microsoft CEO Satya Nadella reportedly indicated that the budget for merit-based salary increases would double, and the range for annual stock-based compensation would increase, as well. (Hat tip to GeekWire for the original information.)

“The most meaningful increases will be focused where the market demands and on early to mid-career levels,” Nadella wrote, according to GeekWire. “We are also increasing Annual Stock ranges by at least 25 percent for all levels 67 and below.” (Levels 67 and below include pretty much everyone who isn’t on Microsoft’s “partner” level.) Considering that Microsoft spent $6.1 billion on stock-based compensation in its last fiscal year, this increase could translate into a very significant amount of money.

But Microsoft might have to spend all that (and more) in order to retain critical tech talent. Many of its rivals have certainly upped the ante: Earlier this year, Amazon announced it would boost its maximum base pay for corporate and technology employees from $160,000 to $350,000. Meta (formerly Facebook), Google and Apple are likewise locked in a salary-boosting “poaching war,” particularly for technologists who specialize in augmented reality (AR), virtual reality (VR), and data science.

How much do software engineers currently make at Microsoft? Late last year, Business Insider pulled compensation data from “leaked salary spreadsheets and visa applications” and found that entry-level positions earned a median compensation package of $132,900, while top earners pulled down $500,000 per year. The median for all engineers was $185,000 per year. 

According to levels.fyi, which crowdsources salary data from dozens of tech companies, the average salary for an entry-level software engineer at Microsoft is $110,981, with stock grants of $28,942 and a bonus of $17,231—for an annual total of $157,154. By boosting the size of merit-based raises, Nadella could ensure those engineers’ compensation climbs rapidly—but will that be enough to keep them at the company for the long term?