Underwater Options Cut Real Pay to $7.5M: Xero CEO Pay

ByPriscilla Li
Exterior of Xero office headquarters building

Xero disclosed on 14 May that Xero CEO pay in FY26 totalled $28.946 million on an accounting basis, but only $7.535 million in take-home pay after a share-price fall left vested options underwater.

In its FY26 annual report, the accounting total for chief executive Sukhinder Singh Cassidy rose from $9.062 million in FY25, but Xero said the options that vested during FY26 had no intrinsic value at 31 March 2026 because the share price sat below their exercise price.

This is the important distinction in the filing: there are two kinds of pay numbers here, and they are doing very different jobs. One is the accounting value of awards that vested during the year. The other is what Cassidy could actually realise. In FY26, the gap between them was about $21.4 million.

The annual report breaks the FY26 figure into base salary of $923,000, pension of $20,000, cash short-term incentives of $614,000, option grants worth $20.371 million and restricted stock unit grants worth $7.018 million. That is why the headline remuneration number looks so large even though the practical value was much lower.

Xero said the vested options were “underwater” as of 31 March 2026, meaning the market price was below the exercise price. In plainer English, the awards existed on paper but not in the money, which is a less glamorous condition for a multimillion-dollar package than the accounting tables first suggest.

The company also said Cassidy had not exercised any of those options by the date of the report. That matters because the annual report’s “total remuneration received” figure is not a cash-paid number, and Xero separately disclosed “total take-home pay” to show the difference.

The earlier reset helps explain why FY26 looks unusual. In a 14 December 2024 ASX release, Xero said it had revised Cassidy’s remuneration to better align with performance and global peers, and disclosed a one-off grant of 575,000 at-the-money options with an exercise price of A$171.11 and a fair value of US$26.49 million.

That revised package also set Cassidy’s base salary at US$540,000, with FY26 long-term equity maximum opportunity of US$7.06 million and long-term incentive maximum opportunity of US$10.59 million. The board said at the time that the changes were designed to support long-term value creation.

If you’re wondering why the share-price move mattered so much, this is why: options are levered compensation. When the stock trades above the strike price, they can be worth a great deal. When it trades below, a large accounting grant can behave more like an impressive-looking receipt for something you cannot currently spend.

Xero’s FY26 investor presentation gives the broader business backdrop. The company reported $2.753 billion in operating revenue for the year, and its annual report said it ended FY26 with 4.9 million global customers. Even so, the remuneration section and presentation both point to a weaker share-price backdrop than when the package was reset, including management commentary that historic grants might be acquired at a discount “given our current share price”.

It is not accurate to describe the disclosure as a simple year-on-year pay cut. The filing shows higher accounting remuneration in FY26 than FY25, but much lower realisable value because the options were out of the money.

The clearest forward fact is that the underwater status was measured at 31 March 2026, and Cassidy had still not exercised those vested options by the date Xero published its annual report on 14 May 2026.

Key Takeaways

  • Xero disclosed FY26 accounting remuneration for CEO Sukhinder Singh Cassidy of $28.946 million.
  • Xero separately disclosed Cassidy’s FY26 take-home pay as $7.535 million.
  • The company said vested options were underwater at 31 March 2026 because the share price was below the exercise price.
  • Cassidy’s FY25 total remuneration received was $9.062 million.
  • Xero’s December 2024 pay reset included a one-off grant of 575,000 options with an exercise price of A$171.11.

Further Reading