Thanks for correcting me , so it was entirely an upper management decision to let him go?
I once read an account of one of the bayern upper guys(one of Rummenigge or hoeness) declining his new wage demands as they basically didn't consider him to be a world class player deserving of such.
Wonder what pep's input was in all of this.
Yeah a Bayern fan can probably tell you more, but as far as I remember it was basically a disagreement about wages/ how much they value him. He wanted to be closer to the top earners, as new players like Götze earned more for instance. Bayern board didn't agree.
Also I think Bayern's board hold on to grudges for a while, so the fact that Kroos refused to take a penalty in that CL final which they went on to lose against Chelsea was held against him. Doesn't have the mentality, not a leader, doesn't identify with the club etc.. And when they did end up winning the CL in the next season his early injury against Juve forced Robben back into the side, which certainly didn't make Bayern weaker.
Kroos himself said at some point that Pep tried to convince him to stay, and he even considered it but ultimately thought that extending his contract for many years for a manager that might not even stay for that long would be a bad idea.
There's a Kroos documentary by the way (bit strange that it exists, especially while he's still an active player). I didn't watch it, but you can check out youtube snippets of Pep speaking about Kroos. It's very clear he rates him highly. It wouldn't surprise me if the Bayern board going above his head on these kind of decisions is part of the reason Pep had no interest in staying longer than those 3 seasons.