Microsofties still digesting pay freeze upset by Nadella's 'landmark year' memo

Following a wave of layoffs and stagnating pay, dissent among some of Microsoft's workforce is breaking out against CEO Satya Nadella after he thanked them for their contribution to the "landmark" fiscal '23.

Microsoft's latest full financial year ended on 30 June and the big boss dispatched a memo on the internal message board to the great unwashed at the tail-end of last week.

"As we approach the end of FY23, I want to express my sincere appreciation to everyone working hard across the company for a strong close," said Nadella in the missive, shared with Insider. "The innovation and creativity you continue to show have made this a landmark year not just for Microsoft, but for our customers, partners, and communities around the world."

Nadella also touched upon the family atmosphere at the company, or what he described as "community," and then urged staff to "ground ourselves in our mission and culture."

There's nothing as tone-deaf as a tech CEO who can flip between channelling their inner corporate evangelist to wax lyrical to shareholders about a company's growth prospects, and then reverse turn to tell staff that weakening business conditions mean no pay rises for the year.

In May, Nadella told Microsofties that to "remain a consequential" business it needs to maintain leadership in existing operations, make enough to invest in future ideas, and run an efficient organization.

"This year the economic conditions are very different across many dimensions, including customer demand, the labor market, and the investments required for the next cycle of innovation… we will not have salary increase for full-time salaried employees," he added.

This was mere months after Microsoft announced the redundancy of 10,000 staff in January. Microsoft, like others, recruited heavily in the pandemic and felt headcount was too high for a slowing economy.

For the nine months ended 31 March 2023, Microsoft reported net revenue of $155.7 billion, up from $146.4 billion, and net profit of $52.28 billion, albeit down 6.6 percent year-on-year. As we've said before, Microsoft is not on the breadline.

The company found $69 billion to pay for Activision Blizzard, and is currently trying to pressure regulators in the US and UK to overcome their competition concerns and approve that acquisition.

Neither is the company's management worried about future growth prospects, despite the words of caution Nadella shared in the memo to staff about pay freezes. In a disclosure related to the FTC hearing for Activision Blizzard case, Nadella said he expects Microsoft to be a $500 billion turnover business by 2030 and to "deliver in excess of 10 percent annual returns to shareholders."

Lest we forget about how important shareholders are, Microsoft last month approved a quarterly dividend of $0.68 per share, payable in September. And just two weeks ago, Microsoft shares reached a new high, valuing the business at almost $2.6 trillion. This was on the back of generative AI hype across the tech industry.

Insider reports that 200,000 people saw the CEO's memo about the landmark 2023 and many responded to it with an upvote. Yet not everyone shared those sentiments with one saying: "good way to show gratitude is to unfreeze pay raises."

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Another said: "Here employees take pay cuts as our company and leadership make record profits. It's not right, no other way to look at it."

In fiscal 2022, Nadella was awarded a pay packet of $55 million, up 10 percent year-on-year. This was a CEO to employee ratio of 289 to 1, as the average staff pay at Microsoft was $190,302.

One more employee upset with the CEO's message said they worked up to 16 hours a day, saying: "I wonder where the profits come from? For myself, I don't feel privileged at all for working here."

We have asked Microsoft to comment. ®