After a big hack, Microsoft is tying top executive pay to cyberthreats

Microsoft has come under fire recently from both the U.S. government and rival companies for its failure to stop a Chinese hack of its systems last summer. One change the tech giant is making in response: linking executive compensation more closely to cybersecurity.

In April, a government review board described a hack of Microsoft last summer attributed to China as “preventable.” The U.S. Department of Homeland Security’s Cyber Safety Review Board pointed to “a cascade of errors” and a corporate culture at Microsoft “that deprioritized enterprise security investments and rigorous risk management.”

Competitors have taken advantage of the cyber lapse, with Google publishing a blog post this week highlighting the government findings and noting, “The CSRB report also highlights how many vendors, including Google, are already doing the right thing by engineering approaches that protect against tactics illustrated in the report.” 

CrowdStrike prominently displays the government conclusions on its site.

Nation-state attacks from China and Russia are increasing, and targeting corporations across the economy, as well as the U.S. government and social infrastructure. Microsoft has been a very big target, including hacks by Russia and China. There is growing pressure from the U.S. government for the company to improve its cybersecurity protocols, with its top corporate lawyer, Brad Smith, being called to testify on Capitol Hill.

Microsoft is in damage control mode. After a hack of executive email accounts in January attributed to Russian hackers, the company disclosed the incident in compliance with new federal cybersecurity disclosure rules, even though technically it was not a “material” hack that it was required by law to share, leading to discussion at other firms about where to draw the line on the new disclosure. The decision by Microsoft to link executive compensation to successful cybersecurity performance is prompting discussions at other firms. 

Microsoft launched its Secure Future Initiative in November, and earlier this month, the company outlined in a blog post from Charlie Bell, executive vice president of Microsoft Security, that as part of its SFI goals it will “instill accountability by basing part of the compensation of the company’s Senior Leadership Team on our progress in meeting our security plans and milestones.”

A Microsoft spokesperson declined to provide specifics on the compensation, but said as a company which plays a central role in the…