The Xbox unit has missed Microsoft's executive compensation-related growth targets five times in the past six years

Abstract:

Microsoft's latest proxy statement shows that Xbox content and services revenue once again failed to meet the annual growth target linked to performance stock awards for the company's executives. This is the fifth time in six years that the target has not been met. Microsoft set a 4.28% growth target for the fiscal year ending June 30, 2026, but based on the exchange rate adjustment used for salary assessment, this revenue actually fell by 6.03%.

This indicator accounts for 15% of the core indicator weight of Microsoft executive performance stock awards, involving CEO Satya Nadella and other named executives. However, this is only one of many performance indicators, and it cannot be inferred that the overall compensation of executives will increase or decrease in the same proportion. The single Xbox indicator reward coefficient disclosed by Microsoft is 50.58%, and the performance stock award for the entire three-year period will also combine other business indicators and shareholder return performance.

Microsoft's annual business summary is listed in another way. Xbox content and service revenue fell 5% year-on-year; the difference between the two comes from the exchange rate-adjusted calculation method for salary assessment. Microsoft's overall gaming business also performed weak in the fourth fiscal quarter, with Xbox content and services revenue falling 10% year-on-year in the quarter.

This executive compensation indicator will be included in the assessment starting from 2020. Xbox failed to meet Game Pass subscriber growth targets in 2021 and 2022, and failed to meet content and service revenue growth targets in 2023 and 2024; fiscal year 2025 was the only year to meet the target in six years, when the revenue growth was slightly less than 15%, exceeding the 14% target. Growth will turn negative again in fiscal year 2026.

Microsoft CEO Nadella's total compensation disclosed in fiscal year 2026 is approximately US$90.63 million, down from approximately US$96.49 million in the previous fiscal year; company documents do not directly attribute the salary decrease to Xbox's failure to meet targets.