Microsoft Announced of One-time Cash Awards of up to 25% of Annual Bonus to Employees

Microsoft announced on Tuesday that it will provide a one-time, performance-based cash award of up to 25% of the annual bonus to eligible employees. This award will be available to both salaried and hourly workers at the senior director level and below, as stated in a memo from Kathleen Hogan, Microsoft’s Chief People Officer. Junior-level employees could receive up to 25% of their bonus as an additional payout, while senior directors may receive up to 10%.

Hogan emphasized that the awards are intended to recognize employees for their contributions during a strong fiscal year. Microsoft recently reported a 15% increase in revenue for the fourth quarter and a 16% growth for the full fiscal year ending June 30, significantly outpacing the 7% growth seen in fiscal 2023. Microsoft’s stock has also performed well, rising 26% over the past year, surpassing the Nasdaq’s 20% gain.

The varying award sizes are designed to be meaningful across different employee levels, according to Hogan. This initiative comes as Microsoft competes to retain and attract talent in a labor market that remains competitive despite the Federal Reserve’s aggressive interest rate hikes since 2022. The demand for engineers, particularly those specializing in artificial intelligence, remains high, with other top technology companies often offering more competitive compensation packages for software engineers.

Additionally, Microsoft may be seeking to boost employee morale following a period of downsizing. In June, the company announced layoffs affecting its mixed reality division, including virtual and augmented reality, after cutting approximately 10,000 jobs earlier in 2023. In 2022, amid rising interest rates and inflation, Microsoft had increased stock allocations and nearly doubled the budget for merit-based salary increases for employees at the senior director level and below. However, following a slowdown in revenue growth, CEO Satya Nadella informed employees that salary increases would not be implemented the following year.