Five years ago this weekend, March 9, the U.S. stock market hit its crisis bottom. Since then the S 500 has more than doubled, but the economy still remains a sputtering engine. Lindsey Piegza, chief economist at Sterne Agee, discusses on MoneyBeat.
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The price of bitcoin has stabilized around $650, but the future of the digital currency is still hazy. Horizons columnist Michael Casey says digital currencies have a future, but it may not be the future you think. Photo: Getty Images.
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Target’s fourth-quarter profit was nearly halved, cut down by a weak holiday season and a massive data breach that spooked customers. But the stock is up today on the news. Spencer Jakab joins MoneyBeat. Photo: Getty Images.
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Target’s fourth-quarter profit was nearly halved, cut down by a weak holiday season and a massive data breach that spooked customers. But the stock is up today on the news. Spencer Jakab joins MoneyBeat. Photo: Getty Images.
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Facebook shocked the market Wednesday with its $19 billion acquisition of texting service WhatsApp. Was it a canny move, or a sign that prices in Silicon Valley have finally lost touch with reality? S Capital IQ’s Scott Kessler joins MoneyBeat. Photo: Getty Images.
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Through a filing, Microsoft has revealed the compensation package for its new CEO. In short, Satya Nadella is buying all the beers for the next few years.
In numerical terms, Nadella will pick up a $ 1.2 million yearly cash salary, with installments doled out twice monthly. Nadella is also eligible for a cash bonus of up to 300 percent of his salary each year, or $ 3.6 million. The new chief is also set to pick up a target stock bonus of $ 13.2 million in fiscal 2015.
So, for fiscal 2015, Nadella should pick up a total of $ 18 million.
Now, it gets more complex. Recall that Microsoft wanted to pick up a new CEO for the next decade. Nadella’s compensation includes three five-year periods in which Microsoft’s stock performance will be compared to the S&P 500′s performance over the period.
The three periods begin in 2014, 2015 and 2016. They end, of course, in 2019, 2020 and 2021. Microsoft has a target of being in the 60th percentile of performance on index, for which Nadella will receive 600,000 shares for each of the periods. If Microsoft performs at the 80th percentile or above, Nadella will collect 900,000 shares. So the new executive could warrant up to 2.7 million shares total at the end of the three five-year programs in aggregate.
2.7 million shares at Microsoft’s current share price are worth $ 98,145,000. However, as that award will be calculated in shares that have likely appreciated (given that the 2.7 million-share threshold is only met if Microsoft spanks the larger market), Nadella stands to land north of $ 100 million, in addition to his salary, bonuses and regular stock disbursements.
Big dollars. JP Morgan’s Jamie Dimon saw his pay rise dramatically this year to $ 20 million. So, Nadella is being valued by Microsoft as commensurate in value to Dimon, if not more, taking into account the five-year-period disbursements.
Nadella is not being paid a disproportionate sum to his peers in technology, but it’s safe to say that the raise was welcome. Sign of tech losing its marbles and grounding in reality? No. Instead, Microsoft has aligned nearly all of Nadella’s income with performance of the company and the company’s stock price. If you wanted to incentivize performance along certain lines, strap cash to it.
If Nadella hits his marks and takes down the full stack, he’ll have been cheap at twice the price. And if his performance suffers, well, the board can cut his yearly bonuses and he won’t get much, if any, of the long-term incentives.
Top Image Credit: Dan Taylor/Heisenberg Media
Need a new career in 2014? How about trying to be a Navy SEAL? Former Navy SEAL and author Rorke Denver discusses what it takes to join the elite group, and tips on how normal folks can be more disciplined. Photo: Rorke Denver.
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Why do so many on both Main and Wall Streets still feel uncomfortable with the way markets are behaving? Maybe it’s because valuations aren’t what matter. Maybe the real problem is that markets are no longer doing what they’re supposed to do. Michael Casey reports on MoneyBeat.
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After nearly three years of haggling between regulators and bankers, the so-called Volcker rule is on the cusp of becoming law. But even after years of debate, big questions remain about this rule. Neil Barofsky, the former special inspector general of the TARP program, joins MoneyBeat.
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Even with a few weeks left in 2013, it’s clearly going to be a red-letter year for the stock market. Can equities maintain their torrid pace in 2014? Jim Browning says that while the market isn’t likely to match 2013’s pace, investors don’t have much to worry about. Photo: Getty Images.
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WSJ Horizons columnist Michael Casey explains there’s a very valid reason why Bitcoin critics are evoking Tulip Mania as the digital currency’s price soars to new heights. Photo: Getty Images.
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With gains of more than 30% for many financial stocks so far this year, the sector has given many traditional value investors vertigo. David Reilly explains why investors should look closer at the gains.
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Nearly half of consumers plan to head online or to the stores this weekend as the holiday shopping season gets underway, according to a new survey from Deloitte. Joe Welter, partner at Deloitte & Touche, discusses trends on MoneyBeat.
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Sterne Agee Chief Economist Lindsey Piegza joins MoneyBeat to discuss how the Fed might devise that won’t negatively impact the market.
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Sterne Agee Chief Economist Lindsey Piegza joins MoneyBeat to discuss how the Fed might devise that won’t negatively impact the market.
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Will the holidays bring sparkle and cheer to the markets? John Buckingham, Al Frank Asset Management Chief Investment Officer joins MoneyBeat.
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J.C. Penney has blunted its steep drop in sales. Now investors want to know if the improvement can last. Suzanne Kapner discusses on MoneyBeat. (Photo: Getty)
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The virtual currency bitcoin has been much in the news lately. Most of the news has focused on scams and swindles and ponzi schemes, but can you actually just simply live on bitcoin? Austin and Beccy Craig did and explain their experience on MoneyBeat.
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Cisco, the Silicon Valley network-equipment giant, reported revenue rose just 1.8% in its first fiscal quarter, compared with its projection of 3% to 5% growth. Dan Gallagher looks at the surprise numbers and how the grim report affects the tech sector.
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BlackBerry, Twitter and SAC Capital made MoneyBeat’s list of winners and losers. David Benoit breaks it down.
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