Microsoft's Xbox division failed to meet a performance target linked to executive compensation for the fifth time in the last six years. The fiscal 2026 goal required a 4.3% growth in revenue from Xbox content and services. However, the company reported a decline of 6% based on the compensation metric, while business highlights indicated a 5% drop.
The performance metric for executive pay has evolved since 2020. Initially, it focused on Game Pass subscriber growth, which was missed in 2021 and 2022. Starting in 2023, the target shifted to content and services revenue growth. The division missed this goal in 2023 and 2024, with 2025 being the only year it succeeded by achieving growth of just under 15% against a 14% target.
This performance shortfall coincides with broader challenges for the Xbox division, which recently announced plans to reduce its workforce by 3 200 employees as part of a year-long restructuring. Despite these results, CEO Satya Nadella received total compensation of approximately $90.6 million for fiscal 2026, compared to $96.5 million in the previous year.
