Investors Unfazed as Microsoft CEO Nadella Sells Shares

“This is the season for the sale of company shares. After Elon Musk, CEO of Tesla, Inc. (TSLA), which caused a stir by selling 10% of its stake in the electric car company, Satya Nadella, CEO of Microsoft Corporation (MSFT), followed suit last week. According to an SEC filing, Nadella sold 838,584 shares on November 22, 2021 and November 23, 2021, about half of his shares in Microsoft for more than $285 million.

The sale of a large number of shares by a senior executive can cause concern for investors and signal the beginning of a downward trend in a company’s stock price. But Microsoft’s stock hasn’t seen much movement since the news broke. It fell 1% in after-hours trading on November 29, 2021 and is currently trading at $333.77, relatively unchanged since the start of the day.

A Microsoft spokesperson said Nadella was making the sale for “personal financial planning and diversification reasons.” A Wall Street Journal piece suggests he may have made the sale to escape a long-term 7% profit tax on sales above $250,000 that Washington state plans to introduce starting next year.

A successful CEO

Nadella took charge of Microsoft in 2014 and has presided over a period of growth at the company. The tech giant was once considered a competitor to Apple Inc. (AAPL). Under the steady hand of Nadella, it has reinvented itself as a cloud powerhouse, making forays into new and emerging industries such as hardware and the metaverse.

The pandemic and its aftermath proved particularly beneficial to Microsoft’s business and stock price. Buoyed by increasing demand for its cloud services division and for its productivity and collaboration software, the company reported record revenues. Its share price is up more than 50% this year, overtaking Apple twice this year and once last year to become the world’s most valuable company by market capitalization.

This isn’t the first time Nadella has sold a large tranche of his shares in the company he leads. In 2019, he sold 328,000 shares, representing a third of his holdings, before experiencing another spike in Microsoft stock, for prices ranging from $109.08 to $109.68. Nadella made nearly $50 million in 2021 with a base salary of $2.5 million and stock awards of $33 million. He was named chairman of the Microsoft board of directors in June 2021.