Satya Nadella.
Manjunath Kiran/AFP via Getty Images
A lot has been made of
Tesla
CEO Elon Musk’s stock sales, but
Microsoft
CEO Satya Nadella recently sold a chunk of stock that is a much larger portion of his total holdings.
Nadella sold about half his stake in Microsoft (ticker: MSFT), according to recent filings with the Securities and Exchange Commission. The CEO unloaded 838,584 shares on Nov. 22 and 23, netting him about $285 million. He has about 831,000 Microsoft shares left, worth roughly $280 million.
“Satya sold approximately 840,000 shares of his holdings of Microsoft stock for personal financial planning and diversification reasons,” a Microsoft spokesperson told Barron’s in an emailed statement. “He is committed to the continued success of the company and his holdings significantly exceed the holding requirements set by the Microsoft Board of Directors.”
Nadella is required to hold stock worth 15 times his base salary. That amounts to about $38 million. Nadella’s salary is $2.5 million. That’s cash compensation.
Planning and diversification are two reasons. Still, investors are left to debate why he might choose to diversify now, or if state or federal capital-gains taxes changes weighed in Nadell’a decision.
Regardless of the details, the sale is significant. It represents a large portion of his total pay and holdings. Nadella’s total reported compensation over the past three years amounts to about $137 million, including more than $93 million worth of stock.
Microsoft doesn’t award stock options any longer. The company has shifted to performance stock awards that are earned when certain time or performance milestones are hit.
He has been CEO since early 2014. Microsoft stock has returned about 35% a year on average since then, while the
S&P 500
and
Dow Jones Industrial Average
have returned about 16% and 14% a year on average, respectively, over the same span.
The Nadella sales take the CEO pay-and-taxation spotlight away from Musk for the moment. Musk started selling Tesla stock after asking
Twitter
(TWTR) followers if he should sell 10% of his holdings to accelerate paying taxes on unrealized capital gains. Twitter voted yes and the sales commenced.
Musk has sold about 8.6 million shares worth $9.2 billion in recent weeks. He appears to be about half way through the 10% sale his Twitter followers voted for. It’s hard to say exactly, however. Some sales have been stock received as Musk has exercised stock options, while other sales have been from his existing holdings.
Most of Musk’s pay comes in the form of management stock options. Musk, excluding his options, owns about 17% of Tesla stock. Nadella owns about 0.01% of Microsoft stock outstanding.
Microsoft shares aren’t doing much in response to the news. Shares were 1.4% lower in late trading Tuesday, while the S&P 500 and Dow were down about 1.3% and 1.4%, respectively.
Write to Al Root at allen.root@dowjones.com
