Satya Nadella, Microsoft's newly appointed CEO, is getting a serious pay bump.
Nadella will receive a $1.2 million salary, nearly 80% above what he was paid as a division head in 2013, according to a company filing late Tuesday. He'll also get a stock award worth $13.2 million and is eligible for an annual bonus up to $3.6 million. Overall, he could receive about $18 million as a first-year CEO, more than double what he received as head of the Microsoft's cloud computing operation in 2013.
The compensation kicker is a potential equity award based on five year performance periods starting next year. Tied to Microsoft's stock gains, that could be eventually worth more than $300 million. Microsoft says Nadella could receive up to 900,000 shares based on performance over "each of three overlapping, five year performance periods" based on total shareholder return.
According to Microsoft's 2013 proxy, Nadella, 46, received compensation valued at about $7.6 million last year, including a $669,167 salary, $1.58 million bonus and $5.4 million stock award. Nadella gained another $4.9 million from previously awarded shares that vested. He holds another 454,000 shares, worth $15.6 million, that have not yet vested.
Outgoing CEO Steve Ballmer received compensation valued at $1.26 million last year. But as of Microsoft's last proxy filed in October, Ballmer held 333.2 million shares. At Tuesday's $36.35 close, Ballmer's shares - 4% of Microsoft's shares - are worth more than $12.1 billion.
Compared to current compensation plans in Corporate America - particularly tech companies - Nadella's potential payouts and annual compensation isn't over the top - except, perhaps to Main Street. When Apple elevated Tim Cook to replace the late Steve Jobs in 2011, he received restricted stock then valued at about $376 million.
Outside hires don't come cheap, either. Former Google executive Marissa Mayer, lured to Yahoo in July 2012, signed on with the potential to make over $100 million within five years. She received an up-front retention award worth $30 million, a "make whole" stock grant valued at $14 million to cover what she forfeited leaving Google, and her contract calls for an annual stock award worth $12 million.
In 2011, retailer J.C. Penney lured Apple retail store chief Ron Johnson with a stock award valued at $50 million. The struggling retailer ousted Johnson before the shares vested.