Microsoft no longer counts Game Pass growth to determine CEO compensation

In FY23, Microsoft CEO Satya Nadella’s compensation targets are no longer tied to Game Pass growth, unlike the previous three fiscal years.

As Axios reported, Microsoft recently filed a 2023 proxy statement (a document designed for lenders) with the US Securities and Exchange Commission. For fiscal year 2023 (ending June 30, 2023), Satya Nadella’s performance indicators included only one metric related to the gaming side of the company: “Xbox content and services revenue growth.” While we were previously talking specifically about Game Pass subscriber growth.

Revenue growth target of Xbox content and services over 12 months was 4.4%, but the division finished with just 0.7% growth over the previous year. This represents 10% of Nadella’s total performance goals, following Teams monthly active user growth (20%), Microsoft Cloud subscriber growth (20%), and Microsoft Cloud revenue (30%).

Overall, Nadella’s compensation for FY23 was cash and stock $48.5 milliondown from $54.9 million in 2022.

Game Pass growth data in recent years

In FY20 (ended June 30, 2020), subscriber numbers increased by 85.75% compared to the previous year, exceeding the target of 71%. In FY21 (ending June 30, 2021), the target was 47.8%, but the number of Game Pass subscribers increased by only 37.5% compared to the previous year. Even in FY22 (ending June 30, 2022), Game Pass missed its target by 72.88%, up just 28% from the previous year.

So Game Pass subscriber growth fell short of Nadella’s goal in two of those three fiscal years, leading to a move to a new metric tied to the Xbox division as a whole in fiscal year 23. That’s not to say Microsoft is 100% disappointed with the performance of its subscription service, as the company may have different internal goals. However, these numbers are usually not randomly generated, leaving room for speculation that Game Pass is growing slower than expected.

The latest official statements sent by Microsoft speak regarding Game Pass 25 million subscribersAlthough unofficial data indicate more than 40 million.