Microsoft drops Game Pass growth target for CEO compensation

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Satya Nadella’s performance-based pay targets were tied to overall Xbox growth in 2023 but games division fell short

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.