Salesforce Freezes Senior Pay, But Is Equity the Upside?

Salesforce has informed senior staff that there will be no base salary increases for employees at the director level and above this year.

Instead, the cloud software company, which reported $37.9 billion in revenue in 2025, will shift value to alternative compensation elements for senior executives, according to an internal memo reviewed by Business Insider.

In a note from the HR team, the company stated: “We have decided to focus merit increases at the Senior Manager level (grade 8) and below.”

Top-tier employees will face a base-pay freeze, while the “highest performing individuals” will receive enhanced stock and bonus pool opportunities, targeting “investment in performance and long-term growth.”

With this compensation design, Salesforce is reinforcing its pay-for-performance model, which also applies to the CEO and other top leaders.

The approach is intended to sharpen leadership focus on growth. Employees will receive additional details on compensation packages during performance reviews in the coming days.

Salesforce’s shift toward equity‑driven rewards

Salesforce’s pay freeze is paired with a notable recalibration of how the company rewards senior leadership, with a broader slice of directors and senior directors – roughly 10% more than before – now receiving stock grants, and average grant sizes rising across the board.

The company is also concentrating compensation in performance-based equity, with about 80% of its highest‑rated leaders seeing stock awards increase by 20% to 40%.

With the bonus pool funded at 103%, most eligible leaders earned payouts at or above full targets. Top performers didn’t just edge ahead – they received payouts reaching up to 140% of the target.

Salesforce is signalling a clear shift in compensation philosophy: equity is becoming the preferred lever for retention and alignment with long-term value creation – is this a model other enterprises will follow?

By preserving cash while rewarding loyalty and performance, freezing base pay and leaning into alternative vehicles can provide a strategic path to reinforce long-term incentives and commitment.

The approach also sharpens performance differentiation, while expanding opportunities for more senior leaders to stand out.

Salesforce isn’t the first mover on this front – and likely won’t be the last.

However, extending this model deeper into the organisation poses challenges. Equity‑heavy strategies don’t translate as cleanly for lower-level roles, where cash remains the more immediate and necessary motivator.

Will salary freezes become more popular?

Historically, a number of companies have instituted pay freezes for a range of strategic and macroeconomic reasons – Microsoft among them.

In 2023, the tech giant paused base-salary increases for full-time employees, primarily to navigate the post‑pandemic economic cooldown and preserve cost discipline.

Microsoft also reweighted compensation toward variable rewards to stay competitive in the talent market.

“The senior leadership team and I want to recognise the tremendous work and impact of our people who delivered a terrific year of solid execution and world-class innovation,” Kathleen Hogan, Microsoft’s former Chief People Office wrote in a memo for staff.

“All Microsoft employees in levels 67 and below, including hourly and equivalents, who receive FY24 rewards will be eligible to receive a special one-time only cash award in addition to their annual rewards,” the memo stated. “This special one-time cash award will scale based on the employee’s FY24 impact.”

“As the SLT considered this award, our goal was to ensure that everyone eligible receives a meaningful amount at all levels, and thus the differences in percentage of bonus based on level,” Hogan explained.