Nadella's salary set at $1.2M for first year as Microsoft CEO

He's also eligible for a cash bonus of up to $3.6 million

Satya Nadella will get US$1.2 million in salary for his first year as CEO of Microsoft, the company said Tuesday.

That's a substantial jump on his previous salary of $675,000 and considerably more than the $700,000 earned by former CEO Steve Ballmer in Microsoft's previous financial year. Ballmer had asked for a relatively low salary and his pay was below the average for other CEOs of similar companies.

In addition to the salary, Nadella, who is 46, will be eligible for a cash bonus of up to $3.6 million, dependent on Microsoft's business performance. He'll also get an additional stock award of $13.2 million starting in Microsoft's 2015 fiscal year, the company said in a regulatory filing.

Last year, Nadella was awarded a $1.6 million cash bonus thanks to the strong performance of his business unit, which grew its revenue 9 percent year over year thanks mainly to the SQL Server and Windows Server businesses.

Nadella was named CEO earlier Tuesday, a promotion that takes effect immediately. Among the many challenges he'll face, he'll have to guide the company to a cloud-services business model as it seeks to better compete on the Internet. He'll also have to make a success of Microsoft's acquisition of Nokia's smartphone business and support the recently launched Windows 8.1 and Windows Mobile operating systems.

He won't be working alone. Company founder Bill Gates will assume a new role as technology advisor and devote more time to assisting Microsoft and Nadella in his work.

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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