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Microsoft promises Nadella up to $18M for fiscal year 2015

Gregg Keizer | Feb. 7, 2014
Gets big raise to go along with the big promotion to CEO.

Turner was awarded shares worth about $21.5 million at the stock's current price, while Bates was given about $8.1 million worth.

More interesting, however, was another filing last year that laid out new severance payouts for top-level leaders who are laid off as the company continues to reshuffle personnel, or who are pushed out by the new CEO. That plan also blocked the executives from taking jobs in other companies if they are let go.

Executives let go will receive severance equal to their annual base salary, as well as a prorated payment of their expected cash bonus. The stock grants set to vest in the next 12 months will also vest on a pro rata basis. The severance benefits come with some strings: The executive must promise to not disparage Microsoft and would be barred from working for competing companies for 12 months.

Buford had a simple explanation for the severance payments, which apply to an unknown number of Microsoft leaders.

"They're trying to pay some people to go away, with a reasonable amount of money, rather than have things linger for months or even years if someone contests their firing." " said Buford. "It's just another way to ease people out of the organization."

While Microsoft has not announced any top-tier executive departures since Tuesday, when Nadella was named CEO, it may: Nadella could clean house, sweep out some of the old and appoint new members to his team, according to experts in corporate strategy. They said such moves would come quickly, almost certainly in the first 100 days of Nadella's tenure.

"I haven't seen this that often," said Buford of Microsoft's retention and severance program. He named Intel, which changed its retention plan last year, as one the few examples that came to mind.

In 2013, Intel handed out stock bonuses worth $10 million each to a number of upper-level executives as an incentive to stick around for at least two years after the chip maker named Brian Krzanich as CEO, replacing the retiring Paul Otellini

Before he became CEO, Nadella owned 113,666 shares, with an on-paper value of about $4.1 million at today's price. He received a $1.5 million cash bonus for the fiscal year 2013, which ended June 1, 2013.

 

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