Microsoft’s Xbox team snaps a four-year losing streak on key target tied to CEO's pay
Plus: Microsoft worker pay slightly increases and the company finds several ways to delete the word “diversity”
For the first time since 2020, Microsoft’s Xbox gaming division has surpassed an Xbox performance goal that impacts the compensation of CEO Satya Nadella and other senior executives.
That’s according to the company’s latest annual proxy filing issued for stockholders earlier this wee. It breaks down the pay packages for Microsoft’s corporate leaders.
For the 12 months ending June 30, a portion of potential compensation for Nadella, Microsoft chief financial officer Amy Hood and other top executives, was tied to revenue growth in Xbox content and services.
The Xbox goal was one of four “core metrics” impacting 10s of millions of dollars worth of stock potentially awarded to the CEO and other Microsoft leaders. (Nadella alone has $50 million worth of stock in play this year tied to these goals.)
Achieving the Xbox target would help Nadella and co. earn a full payout. Missing it with shrink their take. Exceeding it would grant them more.
The Xbox target for this year called for more than 14% annual growth in Xbox content and services revenue.
The achieved growth, after accounting for foreign currency fluctuations, was just under 15%.
Target hit.
That Xbox revenue achievement doesn’t necessarily speak to the overall health of the Xbox division, since it doesn’t factor in profitability or other business goals, but it nevertheless ends a losing streak for Xbox.
Since 2021, gaming has been the sole division in Microsoft that a) had a specific goal tied to part of their CEO’s pay and b) kept missing it for the four years.1
In that time, the company’s LinkedIn, Azure, Surface and Teams teams, among others, have hit targets tied to senior executives’ compensation—some more consistently than others.
Xbox, however, kept whiffing.
They missed Game Pass subscriber growth targets tied to CEO and top executive compensation in 2021 and 2022.
They missed Xbox content and services revenue growth targets in 2023 and 2024.
The latest performance figures, which I’ll break down more below, come from a pair of new annual filings from Microsoft this week that also offer windows into:
Nadella’s soaring compensation
A much smaller bump for Microsoft’s workers
A significant erasure of references to the company’s efforts around workforce diversity
And a little something I just noticed—but that Microsoft actually tweaked a few months ago—around Xbox’s publicly reported revenue and game discs
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