Microsoft CEO Nadella requested a pay reduction following a security breach, but the total compensation package still increased by 63%.

• Satya Nadella, CEO of Microsoft, requested a decrease in the cash component of his compensation following a security breach that drew criticism from the U.S. government.
• The most recent fiscal year saw a significant increase in Nadella's total pay.
• Microsoft is considering security contributions when determining pay for rank-and-file employees.

If not for a series of cyberattacks, Satya Nadella's total package for the 2024 fiscal year would have been $5.5 million higher than his current pay raise of more than $30 million.

Nadella's compensation for the fiscal year that ended on June 30 was $79.1 million, an increase from $48.5 million in the previous year, as stated in a proxy filing on Thursday. The majority of his pay comes in the form of stock. The compensation committee of the board revealed that Nadella requested that the cash incentive portion be adjusted to account for security concerns.

In July 2023, Microsoft disclosed a data breach that affected U.S. government officials' email accounts, which was revealed in an independent review conducted by the U.S. Department of Homeland Security in April.

This year, Microsoft disclosed that Russian intelligence had gained access to the email accounts of some of its top executives in January.

Microsoft announced that it would reform its practices to address the shortcomings pointed out in the government report, which stated that "customers would benefit from the CEO and board of directors concentrating on the company's security culture."

Nadella announced in a May memo that Microsoft would prioritize security above all else. Later in June, Microsoft revealed that it would take employees' cybersecurity efforts into account when determining their compensation.

The cash incentive portion of Nadella's compensation primarily considers the company's revenue and operating income goals. Originally, it was set at $10.66 million, but the full board ultimately approved a $5.2 million cash incentive.

The committee wrote that Mr. Nadella agreed with the company's strong performance but, reflecting on his personal commitment to security and his role as CEO, requested the board to reconsider the established performance metrics and reduce his cash incentive to reflect his personal accountability for the focus and speed required for the changes necessary in today's cybersecurity threat landscape.

In 2022, Microsoft's security business generated over $20 billion in revenue, surpassing the total revenue of many security companies.

WATCH: Microsoft Copilot AI use accelerates inside companies, but cost concerns weigh