COMP NEWS – Microsoft announced that it will be giving its employees a one-time cash bonus in addition to expected annual bonuses this year.

Microsoft told employees Tuesday that it will provide them with a special one-time cash award amounting to an additional 10% to 25% of the value of their annual bonuses for the company’s recently completed fiscal year.

“The senior leadership team and I want to recognize the tremendous work and impact of our people who delivered a terrific year of solid execution and world-class innovation,” wrote Kathleen Hogan, Microsoft’s chief people officer, in a companywide memo to employees detailing the plan.

Executives will be excluded from the one-time cash award. The Redmond, Wash.-based company says employees at lower levels will be eligible for higher percentages to make the distribution more even.

The company made the announcement as it reported fiscal fourth quarter earnings of $64.7 billion, up 15%, and profits of $22 billion, up 10%, surpassing Wall Street’s expectations. However, the growth rate in its Azure cloud business disappointed some analysts, and Microsoft shares fell more than 5% in after-hours trading.

Microsoft’s employee compensation strategy has fluctuated widely over the past several years. In 2022, it boosted merit-based pay raises, but in 2023 cut pay raises for salary employees.

Microsoft has been all over the map on employee compensation in recent years, announcing in 2022 that it would nearly double its global budget for merit-based salary increases, before making job cuts starting later that year and deciding last year that it wouldn’t be giving pay raises to full-time salaried employees.

This year, in addition to the special bonus, Hogan wrote that Microsoft will also be funding its traditional merit pay increases, regular bonuses, and stock awards.

The rate of the special bonus will be inversely proportional to levels. Generally, those who have been at the company for less time, with less accumulated stock as part of their compensation, are eligible for a higher percentage.

“For example, employees in higher levels such as 67 would receive a cash award equivalent to approximately 10% of their annual bonus, whereas employees level 61 and below would receive a cash award equivalent to approximately 25% of their annual bonus,” Hogan wrote. “As the SLT considered this award, our goal was to ensure that everyone eligible receives a meaningful amount at all levels, and thus the differences in percentage of bonus based on level.”

To read more about Microsoft’s one-time cash bonuses, click here.

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