Microsoft puts the freeze on employee salaries, CEO pay still as hot as ever

Call it the endless drive to sate Wall Street types or sensible business planning in the face of a cooling economy – either way Microsoft says it will freeze the salaries of full-time employees this year.

In an email to workers, shown to The Reg by Microsoft insiders, CEO Satya Nadella delivered the bad news, saying the company is locked in a “competitive environment while also facing global macroeconomic uncertainties.”

“To remain a consequential company, we must maintain a leadership position in our at-scale businesses of today, generating enough yield to invest and lead in the next wave, while staying on the frontiers of both performance and efficiency. That is the context in which we’re making decisions and investing in our people, our business, and our future.”

Nadella pointed to “significant investment in compensation” last year that staff received, which included increasing the “annual stock opportunity.” This was afforded by banking healthy profits in the pandemic as more businesses embraced the cloud.

“This year the economic conditions are very different across many dimensions, including customer demand, the labor market, and the investments required for the next cycle of innovation. Given this, we fund our compensation commensurate with the overall market,” Nadella writes.

“While we will have salary increases for certain hourly or equivalent roles, we will not have salary increase for full-time salaried employees this year.”

The blow for staff comes just weeks after Microsoft released financial results for Q3 of its fiscal 2023 ended March 31showing the organization made a net profit of $18.29 billion, up from the $16.72 billion recorded earlier in the year. Revenue growth slowed considerably but was maintained, swelling from $49.36 billion to $52.85 billion.

For the nine-month period, Microsoft reported revenues of $155.7 billion versus $146.4 billion in the corresponding period of 2022. And it recorded net income of $52.28 billion, albeit down 6.6 percent year-on-year.

• Sonatype axes 14 percent of staff, reminds them not to talk to the press
• Miffed Googlers meme on CEO’s $226M pay award amid cost-cutting campaign
• Cloud slowdown hits Amazon as orgs look to rein in cost
• IBM pauses counting its billions to trim Red Hat staff
• Meta’s Zuckerberg paid $27M in ‘other’ compensation for 2022

Shareholders aren’t going to starve here. Neither are Microsoft’s workforce, where the average annual pay was a little more than $190,000 last year, but nobody wants to work harder each year for little or no additional reward, especially against the backdrop of inflationary increases for their own households.

Perhaps Microsoft thinks the industry is headed for a longer and deeper downturn than first perceived, or perhaps it is being overly cautious so Wall Street doesn’t get any nasty surprises.

Nadella himself was awarded almost $55 million for his service in fiscal 2022, up 10 percent on the compensation he received in 2021. No doubt he’ll take a hit this year too, right? Right?

Microsoft announced the redundancy of 10,000 staff in January, having recruited heavily during the pandemic. It is not alone – Salesforce, Google, Amazon, Meta and many others are also lightening their payroll.

According to data tracker Layoffs.fyi, 192,000 people have been chopped from technology businesses so far this year. ®