Microsoft just adjusted executive stock bonuses to prioritize growing the Teams chat app, signaling 'focus on the product at the highest levels of the company'
Left to right: Microsoft President Brad Smith, CFO Amy Hood, and CEO Satya Nadella
- Microsoft is changing the way it awards stock bonuses to executives in order to prioritize growing the company’s Teams chat app.
- The change signals “the focus on the product at the highest levels of the company,” according to RBC Capital Markets analyst Alex Zukin.
- Microsoft Teams has seen explosive growth in the new remote work era, spiking to 75 million daily active users as of April. But it’s also faced criticism from rival Slack, which has accused it of anticompetitive behavior by bundling the app with its Office 365 productivity suite and making it difficult to uninstall.
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Microsoft is changing the way it awards stock bonuses to executives in order to prioritize growing the company’s Teams chat app, according to its recent proxy filing.
The company’s board determines performance stock awards for executives based on metrics such as growing cloud revenue and subscribers, Teams monthly active usage, Xbox Game Pass subscribers, Surface hardware revenue, and LinkedIn sessions.
Microsoft has adjusted the weight for each of those metrics to make Teams a bigger priority. Growing Teams monthly active users will now account for twice as much of performance stock awards after the company raised the category’s weight to 20% from 10%.
Meanwhile, the weight of the other categories decreased. Commercial cloud revenue decreased to 33% from 35%, commercial cloud subscribers to 32% from 34%, and metrics Xbox Game Pass subscribers, Surface revenue, and LinkedIn sessions each decreased to 5% from 7%,
The change signals the importance of Teams and “the focus on the product at the highest levels of the company,” according to RBC Capital Markets analyst Alex Zukin.
Teams is Microsoft’s collaboration and communications software and has becoming increasingly important for the company as it competes against video conference and messaging apps including Slack, Zoom, and Google Meet.
The pandemic caused Teams usage to surge, up from 44 million daily active users in mid-March to 75 million daily active users in late April, the last time the company provided an update for the metric. Microsoft doesn’t break out revenue specific to Teams, but in its most recent quarter reported $11.75 billion in revenue for the business unit that includes Teams and other products like its Office 365 cloud productivity suite.
Rival Slack this summer filed an antitrust complaint against Microsoft with the European Commission, alleging Microsoft harms competition by bundling Teams into its productivity suite, installing it by default and adding friction to its removal.
Those are the sorts of alleged behaviors that led Microsoft to sign an antitrust settlement with the US Department of Justice in 2001. This week, too, that kind of activity became the focus of the DOJ’s just-filed antitrust lawsuit against Google, which alleges that the search giant harms competition by using it market power to force Android phone manufacturers to bundle in its services.
“We created Teams to combine the ability to collaborate with the ability to connect via video, because that’s what people want,” Microsoft said in a statement to GeekWire on Slack’s antitrust complaint. “With COVID-19, the market has embraced Teams in record numbers while Slack suffered from its absence of video-conferencing. We’re committed to offering customers not only the best of new innovation, but a wide variety of choice in how they purchase and use the product.”
The proxy also details compensation for CEO Satya Nadella and other top Microsoft executives. Nadella made more than $44.3 million in total compensation during the company’s last fiscal year, up a little more than 3%. Microsoft’s board praised Nadella’s leadership amid the pandemic.
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