Microsoft Gives Employees One-Time Cash Awards Up to 25%

Microsoft will give one-time cash bonuses of up to 25% of the annual bonus to nonexecutive employees following strong performance and revenue growth

On Tuesday, Microsoft announced it would provide rank-and-file employees with a one-time performance-based cash incentive that could amount to up to 25% of their annual bonus.

In a memo disseminated to employees, Kathleen Hogan, Microsoft’s chief people officer, announced that salaried and hourly employees at the senior director level and below will be eligible for the award. A maximum of 25% of their incentive may be awarded to junior-level employees, while senior directors may receive up to 10%.

According to the memo, Hogan stated that Microsoft’s executives intend to give employees recognition for a successful fiscal year. After the close of trading on Tuesday, Microsoft disclosed its fourth-quarter results, which indicated a 15% increase in revenue from the previous year. Revenue increased by approximately 16% during the fiscal year that concluded on June 30, surpassing the 7% increase observed in fiscal 2023.

As of Tuesday’s close, Microsoft shares have increased by 26% over the past year, surpassing the Nasdaq’s 20% increase.

Hogan stated that the additional payouts are intended to be significant at various levels, which is why their sizes varied.

Despite the Federal Reserve’s aggressive campaign to raise interest rates beginning in 2022, Microsoft is currently engaged in a battle to retain employees and recruit talent in a labor market that has remained resilient. Engineers specializing in artificial intelligence are among the most sought-after professionals in technology.

Software engineers of varying levels of experience are frequently compensated more by top technology companies than by Microsoft, as indicated by data collected by a single website, Levels.fyi.

Following a period of retrenchment, Microsoft executives may also attempt to improve morale. Microsoft announced in June that it terminated employees involved in mixed reality, including virtual and augmented reality. This announcement was made in response to the company’s decision to eradicate approximately 10,000 positions in early 2023.

Microsoft increased stock allocations for employees and nearly doubled the budget for merit-based salary increases for employees at the senior director level and below in 2022, as central banks increased interest rates to combat inflation. In the subsequent year, CEO Satya Nadella informed the company’s workforce that salaries would not be increased as revenue growth had declined into the single digits.