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April 5, 2021

Microsoft Salary Negotiation

The goal of this guide is to equip you with the essential pieces of information you need for your upcoming Microsoft negotiation. Microsoft has experienced an incredible turnaround under the leadership of Satya Nadella, which has made it a much more attractive place to work for top tech talent. However, Microsoft is one of the toughest companies to negotiate with and has much tighter purse strings than companies like Facebook or even Amazon.

If your situation is unique or you want 1:1 support to ensure you maximize your compensation, please sign up for a free consultation with our expert negotiators.

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Table of Contents

Microsoft Offer Compensation Components

Before starting any negotiation, it is critical you fully understand the compensation components offered. A typical job offer for a tech role at Microsoft (e.g. Software Engineer) should contain the following monetary components:

This is what an example Microsoft SDEII offer looks like over a 4-year period:

The high-level overview of compensation is important as recruiters often leave out components (e.g. signing bonus). But, there are also some key differences within these components at Microsoft vs FAANG companies.

Base Salary

Microsoft's base salary component is similar to other big tech companies. There is a base salary band associated with each role/level/location. The size of the band increases with seniority - at junior levels it is quite narrow. Microsoft is often only slightly lower on base salary relative to FAANG companies. It is possible to negotiate this component, but the increase will typically be smaller than equity and signing bonus increases. Base salary at Microsoft is paid bi-weekly in the United States.

Signing Bonus

Many Microsoft offer letters don't include a signing bonus by default. It's a common recruiter trick to leave it out of the initial job offer. This can be a good way to increase your offer since Microsoft is less flexible on recurring increases (i.e. base salary and equity).

For most technical roles at Microsoft, it is possible to negotiate a higher signing bonus even if it's not in your initial offer. The two most helpful pieces of leverage are 1) competing offers 2) retention bonuses at your current company. As a reference, Microsoft signing bonuses are typically much lower than Facebook signing bonuses, but only slightly lower than Google.

In some cases where we have negotiated a particularly large signing bonus, Microsoft has split the payment over a two-year period.

Microsoft will pay your signing bonus in your first month of employment - unlike Amazon which is prorated. Notably, Microsoft will clawback your entire signing bonus if you leave before the 1-year mark. This is not the case at Google, Facebook or Amazon. Below I've included the wording from a SDE Microsoft offer we negotiated recently.

"We are pleased to offer you a signing bonus in the total gross amount of $25,000.00 USD, less applicable tax withholdings. This bonus will be paid to you within 30 days following your start date. As we have discussed, this represents our genuine interest in your joining Microsoft. Please note that this signing bonus will be considered taxable income, and payroll taxes will be withheld. In the unlikely event that you leave the company of your own volition prior to completing 12 months of employment, the $25,000.00 USD will not be earned and must be returned to Microsoft in full. By signing this offer letter, you hereby authorize Microsoft to withhold this amount from any monies owed to you."

Equity (RSUs)

Microsoft, like many big tech companies, vests equity evenly over 4 years (returning SWE interns have a different vest schedule). This means if you are granted $200K RSUs, you will receive the following:

You will receive your first equity vest at the 1-year mark and then 6.25% will vest every quarter thereafter. This is slightly less convenient than Facebook which vests every 3 months and Google which vests every month (for offers with >$160K equity) .

Equity is the component where Microsoft pay is the least comparable to FAANG companies. An E5 engineer at Facebook can expect ~$150K per year in equity, whereas at Microsoft a level 64 averages ~$40K per year.

Despite the low starting point, it is definitely worth your while to negotiate this component as we have seen some truly huge increases. For example, we helped a level 65 program manager increase her equity from $125K (over 4 years) to $500K! There were some key factors that led to this increase which will be outlined in the negotiation tips section at the bottom.

Performance Bonus

Microsoft has a different approach to performance bonuses vs Google and Facebook. To start, they don't usually list the target bonus in the offer letter. Instead, they often list a wide range as your potential bonus. We recommend asking your recruiter what the target number is, though in most cases the answer is simply the middle of the range. Here is the wording from a Microsoft offer letter:

"You will also be eligible for an annual bonus, ranging from zero to a maximum of 40.00% of your bonus eligible salary during the rewards period based on your performance. Your first eligibility for a bonus will be determined based on your start date and will be reviewed each year per Microsoft eligibility rules."

For most teams within Microsoft, in order to increase your bonus (e.g. from 10% target to 15%) the manager needs to decrease someone else's bonus proportionally (e.g. from 10% to 5%). This makes managers less likely to give above target bonuses.

This component is not negotiable, but it's important to include it in your total compensation when comparing to other offers, especially when comparing to companies like Amazon that are much less likely to pay performance bonuses.

Stock Refreshers

Targets for stock refreshers are not included in the offer letter and therefore are more difficult to evaluate when comparing total compensation between multiple companies. However, as a general rule, Microsoft provides very small refreshers. Below are the target numbers from 2020. All values vest over 5 years.

Microsoft Negotiation Process

Candidates often find it helpful to have a high-level overview of the negotiation process. However, this does vary by candidate, with one key vector being seniority. It's helpful to split into junior (<63) and senior levels (63+). Here is a quick overview of Microsoft levels:

If you have not yet received an offer from Microsoft there are a few critical mistakes to avoid:

  1. Do not share your current compensation. In many states (e.g. California) it is illegal for companies to ask this, so you are certainly within your rights to say "I do not feel comfortable sharing that information".
  2. Do not share your compensation expectations. Microsoft recruiters will sometimes frame this as "seeing if you are a fit for the role". However, it is in your best interest to deflect this question until Microsoft has extended an offer. One possible response is "right now I'm focused on the interview process and don't have a number in mind, but I'm confident we will be able to get to a number that works for both of us."

With that out of the way, let's discuss the process for Microsoft junior tech employees.

  1. After completing your onsite interview, you will often hear back from your recruiter within a few days.
  2. On the initial call post-interview (i.e. the offer call), Microsoft recruiters usually share the initial offer package. Sometimes when you have competing offers they attempt to withhold it until you give them expectations. It is usually possible to pushback and get the initial offer.
  3. During the offer call, the recruiter will ask you how you feel about the offer and discuss timelines. Microsoft is typically aggressive on timelines and will often threaten candidates with exploding offers
  4. We recommend you take a day to digest the initial offer and consider the best point of leverage for your counter offer discussion
  5. You will then setup your second call with the recruiter to discuss the offer. On that call you will disclose your counter offer. The recruiter will likely push back and at Moonchaser we build a tree diagram unique to your situation with the most likely objections and the optimal responses to those objections. The goal is to get the recruiter to take your counter-offer back to the team
  6. Typically you will hear back in within a week with their "final" offer. It is possible to continue the negotiation at this point, but it often requires new information (e.g. you just received a higher offer from Amazon)

There are two primary differences between junior and senior negotiations at Microsoft:

  1. Senior employees are likely to see fewer pressure tactics compared to junior employees. For example, requests for competing offers in writing can be more easily deflected. Generally speaking, recruiters working with these candidates provide more of a white glove service.
  2. Recruiters will push you more to give them an initial number, rather than providing an offer. Given the importance of senior leaders and the wide range of the salary bands, they are typically hesitant to risk losing a candidate. This means the first number you provide is hugely important for anchoring the negotiation.

Microsoft-Specific Negotiation Advice

Here are some important pieces of information to keep in mind when negotiating your Microsoft compensation.

Unwilling to match: In many cases, Microsoft is simply unwilling to match higher competing offers. Recruiters know they will not get approval to match and will be upfront about this when you share competing offers. As a result, we recommend you still lead with you counter offer (to avoid leaving money on the table), but if you are getting clear pushback you can soften it by saying "if you can get close to my target number, that would meet my compensation expectations". Some specific orgs (e.g. Azure) are more willing to negotiate.

Decision maker: At Microsoft most compensation increase approvals go through the hiring manager or their manager. For significant increases the recruiter will need to secure VP approval. We recommend investing heavily in building a good relationship with your hiring manager. One way to do that is by setting up a call to discuss the team and how to succeed at Microsoft before accepting the offer. A strong relationship with your hiring manager will make a big impact on your ability to negotiate an increase.

Time pressure: Since Microsoft is not able to match competing offers, they know their best tactic is to force candidates to drop out of their other interviews. They will often put aggressive timelines on your initial offer when they first share it. However, we have seen that in most situations it is possible to pushback successfully, as Microsoft is worried about getting too negative a reputation with engineers.

Don't push for offers in writing: Unlike companies like Google, Microsoft does not usually require you to provide cross offers in writing. This can be useful because many companies avoid putting their offers in writing, so you can't use them as leverage in other negotiations.

Relocation: This is one area where Microsoft has a first class offering. For international applicants the package can be up to $18.5K. The best part is you can take it as cash and they will gross up the total value to cover taxes. Recruiters aren't always proactive about disclosing this so make sure to ask.

Want to learn more from expert negotiators who have negotiated dozens of Microsoft offers?

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