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Microsoft announced on Tuesday that it will issue one-time cash awards of up to 25% of annual bonuses for rank-and-file employees. The performance-based awards are intended to acknowledge employees’ contributions during a strong fiscal year.
Award Details:
- Eligibility: Salaried and hourly workers at the senior director level and below.
- Junior-Level Employees: Eligible for a cash award up to 25% of their annual bonus.
- Senior Directors: Eligible for a cash award up to 10% of their annual bonus.
Fiscal Performance:
- Fourth-Quarter Results: Revenue increased by 15% year-over-year.
- Full Fiscal Year: Revenue climbed about 16%, up from a 7% increase in fiscal 2023.
Stock Performance:
- Microsoft Shares: Up 26% over the past year, outperforming the Nasdaq, which gained 20%.
Purpose of the Awards:
- Employee Retention and Recruitment: The awards are part of Microsoft’s strategy to retain talent and attract new employees in a competitive labor market, especially in the high-demand field of artificial intelligence.
- Morale Boost: The payouts also aim to boost morale following a period of downsizing. Earlier in the year, Microsoft cut approximately 10,000 jobs and made further reductions in its mixed reality division.
Context of Compensation Trends:
- Previous Actions: In 2022, Microsoft increased stock allocations and nearly doubled merit-based salary budgets for certain employees.
- Current Market Conditions: Despite strong fiscal performance, Microsoft has faced challenges in maintaining competitive compensation levels compared to other tech giants.
Historical Context:
- 2023 Salary Adjustments: Following a revenue slump in 2023, CEO Satya Nadella had informed employees that salaries would not be increased.