Microsoft announces one-time cash bonuses of up to 25% for employees.

• Microsoft will hand out one-time cash awards to non-executive employees.
• The bonus amount will vary based on the employee's role and the size of the bonus, but it will not exceed 25% of the annual bonus.
• Over the past year, Microsoft outperformed the Nasdaq and experienced revenue growth that accelerated compared to the previous fiscal year.

On Tuesday, it was announced that rank-and-file employees would receive a one-time performance-based cash award of up to 25% of their annual bonus.

Microsoft's chief people officer, Kathleen Hogan, announced in a memo that salaried and hourly workers at the senior director level and below will be eligible for an award. The amount of the award varies based on the employee's level, with junior-level employees receiving up to 25% of their bonus and senior directors receiving up to 10%.

Microsoft's leaders want to recognize workers for a successful fiscal year, as reported in a memo by Hogan. Microsoft's fourth-quarter revenue increased by 15% from the previous year, and the full fiscal year revenue climbed about 16%, accelerating from 7% in fiscal 2023.

As of Tuesday's close, Microsoft shares have risen 26% in the past year, surpassing the Nasdaq's 20% increase.

Hogan stated that the additional payouts vary in size to be significant at different levels.

Despite the Federal Reserve's aggressive campaign to raise interest rates starting in 2022, Microsoft is struggling to retain employees and attract new talent in the technology industry, particularly those with expertise in artificial intelligence.

According to data from Levels.fyi, top technology companies frequently provide higher compensation for software engineers of different experience levels than Microsoft.

Microsoft executives may be attempting to increase employee motivation after a period of layoffs. In June, Microsoft announced that it was cutting employees working on mixed reality, including virtual and augmented reality, after eliminating approximately 10,000 jobs in early 2023.

In 2022, central banks raised interest rates to combat inflation, while Microsoft boosted employee stock allocations and nearly doubled the budget for merit-based salary increases for senior director level and below employees. The following year, CEO Satya Nadella announced that the company would not be increasing salaries due to sluggish revenue growth.

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