Microsoft is one of Wall Street's most obvious turnaround stories in recent history.
The company has added almost $500 billion to its market cap since Satya Nadella took the CEO position five years ago today. Internally and externally, the company is viewed more favorably than it was under Nadella's predecessors.
But Nadella has not yet joined the ranks of the world's most valuable individuals. Meanwhile, Microsoft co-founder and original CEO Bill Gates is the second-richest person on the planet, with a net worth of $95.7 billion, and the company's second CEO, Steve Ballmer, is worth approximately $39.2 billion, according to data from Bloomberg.
In the most recent fiscal year, which ended on June 30, Nadella received $25.8 million in total compensation, according to Microsoft's most recent proxy statement. That's up 29 percent year over year. His pay was higher than many other CEOs of companies in the S&P 500. But it's lower than the chiefs of companies with lower stock growth over the past five years, like Oracle's Mark Hurd ($108.3 million), Walt Disney's Bob Iger ($65.6 million) and 21st Century Fox's Rupert Murdoch ($50.3 million).
Taking into account a recent stock sale and his Microsoft holdings, Nadella is likely worth more than $320 million. But not much more.
"Whatever they're paying him, it's not enough," former Microsoft executive Brad Silverberg told CNBC.
Nadella once worked for Silverberg, who left the company in 1999 and is a founding partner at venture capital firm Ignition Partners. He provided input for the selection of Ballmer's replacement. Silverberg took into consideration the qualities he remembered about Nadella — that he was humble, and that he recommended strategies that were in the best interest of the company, not himself. He thought Nadella, then a 22-year company veteran, would make a great CEO, and today he feels Nadella exceeded his expectations.
"I'm really happy with his contributions to the company," Silverberg said. "Obviously the stock price is one metric, but if you look at the internal culture of the company, people are happy there. People are really proud to work for Microsoft. I think he's done a lot to make that happen."
Investors are happy with Nadella as well: Microsoft's stock has risen nearly 182 percent since Nadella took over, according to FactSet.
"If you look at the stock's more than doubling in value, clearly one could argue he's underpaid relative to the wealth creation he's been able to do in the stock," said Brent Bracelin, managing director at KeyBanc Capital Markets.
"They have been able to transform one of the legacy client-server models, and they're now becoming the leader in cloud across IaaS [infrastructure as a service] and SaaS [software as a service], and he's done it, yet, look at his comp."
Microsoft's perception has improved in Silicon Valley, too.
When Nadella took the helm, Steve Herrod, a former VMware executive and now managing director at venture capital firm General Catalyst Partners, didn't have any Microsoft apps on his phone. Now Herrod has nine Microsoft apps on his phone, and he believes Microsoft has the best mobile email app: Outlook.
One start-up Herrod invested in, Impira, chose Microsoft's Azure cloud because the team thought Microsoft's cloud-based artificial intelligence capability was better than what was available from the Amazon and Google clouds, Herrod said.
"From all perspectives, he's done an outstanding job, and a top-five CEO should have a commensurate package," Herrod said of Nadella.
The company is more open and flexible now, and assets like LinkedIn and GitHub have given Microsoft meaningful data, said Gordon Ritter, founder and general partner of venture firm Emergence Capital.
"If I were on the board of Microsoft, I would say, 'Did he really look at things differently than those that came before and actually interrupt the natural processes that were going on?' And my answer is yes, compared to the interruptions Tim Cook did do or didn't do. I would say he interrupted and changed the course of Microsoft in fundamental way."
Given that, Ritter said Nadella would be deserving of some kind of additional grant.
"I think everybody feels good about Satya as CEO of the company -- Bill and Steve and the company's board of directors," Silverberg said. "They should thank their lucky stars that that's who they hired as CEO."
Microsoft didn't respond to a request for comment.
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