Microsoft drops Game Pass growth target for CEO compensation

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For the first time in three years, Microsoft CEO Satya Nadella’s pay targets did not include a specific growth milestone for Xbox Game Pass.

A Microsoft SEC filing, spotted by Axios, instead shows Nadella’s only games-related performance-based incentive for the fiscal year ended June 30, 2023 was to grow Xbox Content and Services revenue by 4.4%.

Over 95% of Nadella’s annual target compensation opportunity is performance-based.

The Xbox target only accounted for 10% of his performance-based pay targets, with the largest category being to grow Microsoft’s cloud revenue, which was weighted at 30%.

Xbox’s revenues did not meet the 4.4% growth target, instead only growing by 0.7%.

Axios’ analysis shows that Nadella previously had targets based on the subscriber growth of Xbox Game Pass.

Last year, Microsoft aimed for 73% growth in Game Pass subscribers, but the actual result was 28%.

The filing lists Nadella’s total cash and stock compensation for the twelve months ended June 30, 2023 at $48.5 million. Axios noted this is down from $54.9 million in the previous year.