Half of Cassidy’s long-term incentive is a no-strings retention award

The number that frames the fight

At Xero’s annual meeting on 27 August 2026, chair David Thodey defended a decision to lift chief executive Sukhinder Singh Cassidy’s remuneration in the face of a growing shareholder revolt. The new package sets target total remuneration at US$18.5 million, roughly NZ$30 million, up 22% from US$15.2 million. Base salary rises to US$640,000, with long-term incentive and equity awards climbing to US$17.22 million.

The timing is awkward. Xero shares have fallen about 47.5% over the past year, from above A$160 to around A$83-87. Shareholders are being asked to endorse a double-digit pay rise while holding stock worth roughly half what it was 12 months ago.

The board’s argument is genuinely reasonable

Thodey’s case rests on benchmarking, and it is not a weak one. An official Xero market release dated 24 August 2026 shows Cassidy’s target pay previously sat at the 25th percentile of a US peer group of Atlassian, Workday, Snowflake, HubSpot and Zoom. The board moved it to the median. That peer group is the actual market Xero competes in for executive talent, not the NZX.

The operating numbers support the framing that Cassidy has delivered. FY26 operating revenue hit NZ$2.753 billion, up 31%, adjusted EBITDA reached NZ$757.4 million, up 18%, and the customer base grew 11% to 4.92 million with 506,000 net additions, a 99% increase year-on-year. The Rule of 40 score improved to 48.5%. Xero is a global software company, and paying below-market for the person running it is a real retention risk.

Where the structure falls apart

But a defensible headline number sits on top of a package that fails on its own governance terms. New Zealand Shareholders Association chief executive Oliver Mander put it plainly: “As a shareholder, it’s really difficult to love this.”

Two problems stand out. Only 25% of Cassidy’s performance-linked pay is tied to the share price, the metric shareholders care about most. And half of the US$17.22 million long-term incentive is a ‘service award’, a retention payment for simply remaining with the company, with no performance condition attached. The NZSA warned about exactly this in 2023, writing that “the complexity inherent in many CEO pay structures are designed in part to obfuscate and confuse” and describing the pay-consulting industry as a systemic conflict of interest.

In fairness, the FY27 realisable pay is projected at only US$4.4 million because of three-year vesting, so the NZ$30 million is a ceiling, not a cheque. The board also added a new requirement that Cassidy build shareholding worth five times base salary within three years. It listened enough to bolt on a shareholding rule, but not enough to fix the structure shareholders actually objected to.

The accountability gap

This is where it becomes a governance test rather than a pay row. At Xero’s 2025 annual meeting, 48.74% of shareholders voted against the remuneration report. Under Australia’s two-strike rule that near-miss would have triggered a formal board accountability process. But Xero is domiciled in New Zealand, not Australia, so the ASX mechanism does not apply. The company enjoys ASX-listed access to deep capital markets while sidestepping the accountability rules that bind Australian-registered firms.

The scale gap sharpens the point. The median NZX CEO earns NZ$1.09 million, and the highest-paid NZX CEO earned NZ$8.31 million. Cassidy’s target is roughly 27 times the median. That does not make it wrong, but it shows the cultural distance between where Xero operates and where it is registered.

The strategy question underneath the pay question

Shareholders are not only annoyed about structure. Net profit after tax fell 27% to NZ$167.4 million in FY26, dragged by the roughly NZ$4 billion Melio acquisition and the ‘3×3’ payments bet that has yet to show up in the share price. The pay revolt is partly a proxy for doubt about the strategy itself.

Thodey has a legitimate case to make about global talent markets. He has not made it convincingly, because the package he is defending rewards retention over performance and barely tracks the metric that has halved. Boards of NZ-founded global companies will be watching how this vote lands. The lesson so far is that benchmarking justifies the number, but only structure earns the trust.

Sources

• NZ Herald: Xero chair defends CEO’s $30m pay package amid growing shareholder revolt (2026-08-27)
• NZ Herald: Xero CEO’s $30.9m pay package frustrates shareholders (2026-08-27)
• RNZ: Xero’s CEO gets pay-rise after review finds pay below other technology company leaders (2026-08-24)
• NZ Herald: Xero board faces ‘first strike’ over CEO’s $26m pay package (2025-08-21)
• Xero Appendix 4E and FY26 Annual Report (ASX filing) (2026-05-14)
• Xero FY26 earnings announcement (2026-05-14)
• NZXplorer NZX CEO Pay Report 2026 (2026-04-10)
• NZSA: Remuneration — when is it simply too much? (2023-09-30)