Companies nickel-and-dime us with below-inflation payrises, hoping we don't notice
Microsoft CMO: "The most important lever for almost all our employees' compensation upside is the stock price. So great quarterly results contribute to making the stock attractive which in turn drives everyone's total compensation up."
By that logic, cut employee pay! That'll improve quarterly results, which will jack up the stock price - (almost) all employees wiil be fabulously rich!
So that's what they just did. :-)
I'm sure this works well for CEO/CMO/CIO-level employees who get a lot of stock and cash that they can funnel into investments. Not so much for folk far below their level who have mortgages to pay.
The average Microsoft employee tenure seems to be around 5 years. Microsoft stock dips and swells (there was an almost 50% dip last year, before its rescue by ChatGPT). However, Microsoft stock is up 50% from 2.5 years ago. So let's assume stock increase 20% in value annually for the last 2-3 years.
Assume employee stock is about 20% of MS employee pay (Source: https://www.levels.fyi/companies/microsoft/salaries/software-engineer). The vesting schedule is 5 years, so on average only half of the first year's stock award has vested. But let's be generous and assume half of all annual stock RSUs have vested. That means 10% of pay (which is stock) is available to sell. Over 2.5 years, this stock increased in value (say) to 15% of pay -- but that's over 2.5 years. So if you sell off the increase in stock value, that a pay hike of 2% per year. Not enough to beat inflation (around 5%), nor loss of bonus this year (another 5%).
So the average Microsoft employee got a pay cut of around 5-8% this year. If they do this in a good season, imagine why they'd do in a bad one.
It's sad how companies hire at one price, then nickel-and-dime you with below-inflation payrises, hoping you don't notice. Eventually, people leave just to maintain their standard of living. Maybe that's why the average Microsoft employee tenure is just 5 years - the lure of unvested stock isn't enough to offset pressure to move elsewhere. However, it's the same dance at many other companies.
I recall discussing this with my manager once. I'd received a payrise significantly below inflation, so I asked if I'd performed poorly that year. He denied it. Then I asked "then why did you cut my pay?". He denied that even more strenuously, saying "you're getting more dollars this year than last year, so we have given you a pay rise", etc. I said it was a pay cut in real terms. To his credit, he came back a couple of days later saying he'd thought about it and that I was right - it was a paycut. I don't recall what happened after - it was almost two decades ago. But I like to think I got an out-of-turn payhike to compensate.
Anyway -- all the numbers are approximate. I may be wrong but that's my view at this point in time.
Biting the hand that feeds IT
