Microsoft employees' cybersecurity performance will impact their compensation.

• The president of Microsoft, Brad Smith, announced that one-third of the "individual performance" portion of bonuses for top executives in the new fiscal year will be linked to a review of their cybersecurity work, ahead of a hearing on cybersecurity in the U.S. House of Representatives on Thursday.
• Cybersecurity contributions of individual employees will be discussed with their managers during twice-annual reviews that influence total compensation.

Brad Smith, Microsoft's vice chair and president, announced that the company will evaluate its employees' cybersecurity contributions in compensation reviews.

Microsoft is taking steps to address concerns about the protection of its clients' data.

In April, the Department of Homeland Security released a report detailing the findings of an independent review into China's hacking of U.S. government officials' email accounts, which Microsoft had disclosed last year. Microsoft pledged to make changes to its practices following the report's identification of areas for improvement.

In a Wednesday addendum to his written testimony to the House Committee on Homeland Security, Smith stated that security will be a new core priority for its employees' twice-annual reviews with managers in the 2025 fiscal year, which starts on July 1.

The "individual performance" portion of bonuses for senior executives who frequently meet with CEO Satya Nadella in the 2025 fiscal year will be tied to a cybersecurity review by the board's compensation committee. A third party not specified in the addendum will assist with the review.

This fiscal year, high-ranking executives may experience cybersecurity-related effects on their compensation.

"The Board decided that for the current fiscal year, which ends on June 30, the Compensation Committee will consider explicitly each SLT member's cybersecurity performance when making its annual assessment of the executive's performance. Additionally, the Board has the ability to exercise downward discretion on compensation outcomes as it deems appropriate."

The livestream of the hearing will begin at 1:15 p.m. ET on Thursday.

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