Microsoft Uncouples Game Pass Growth from CEO Satya Nadella’s Performance-Based Pay

25.10.2023 - 00:35 / comingsoon.net / Phil Spencer / Xbox Game Pass

Microsoft CEO Satya Nadella now has one less milestone to worry about when it comes to his performance-based pay, as the company has dropped growth targets from the metrics used to determine his compensation. Although a LinkedIn post from September indicated that Game Pass may have over 30 million subscribers, this seemingly still falls short of the number of players the gaming giant had hoped to attract to its subscription service.

As initially reported by Axios, Microsoft CEO Satya Nadella’s performance-based pay for the 12 months ending June 30, 2023, didn’t include Xbox Game Pass subscriber growth among its many metrics. This revelation about changes to Nadella’s compensation for 2023, which dropped to $48.5 million compared to the $54.9 million he earned in 2022, came courtesy of an SEC filing by Microsoft. According to the documents submitted to SEC, while a portion of Nadella’s pay was tied to growth in Xbox content and services revenue, his compensation no longer relied on Xbox Game Pass growth as a metric despite having done so in previous years.   

Removing growth in the number of Xbox Game Pass subscribers from the metrics used to determine Nadella’s pay may be a response to the subscription service’s failure to meet its growth targets in recent years. According to the Axios article, Nadella’s 2022 pay target called for 73% growth in the number of Game Pass subscribers but fell far short of that number, only increasing by 28%. This underwhelming growth not only affects Nadella’s compensation for the year but could also impact Microsoft’s decision on whether to stay in the gaming market at all. According to recent comments from Microsoft Gaming CEO Phil Spencer, Microsoft could abandon Xbox within the next decade if Game Pass fails to meet the company’s expectations.

While Nadella’s pay for 2023 won’t be affected by the service’s underwhelming performance when compared to projections, Xbox Game Pass subscriber growth could return as a compensation metric in the future if subscriber numbers rebound. Phil Spencer has ruled out making games exclusive to Game Pass as a means of driving players to the service, but 2024 could nonetheless see a dramatic rise in the number of subscribers. This is largely due to the expected arrival of Activision games on Game Pass in 2024, although it’s still unknown exactly when franchises like Call of Duty and Diablo will make their way to the service.