Activision Blizzard shareholder says firm has 'unnecessarily enriched' CEO Kotick

Activision Blizzard shareholder says firm has 'unnecessarily enriched' CEO Kotick

An Activision Blizzard shareholder has accused the company of finding "multiple ways to unnecessarily enrich its CEO."

In a PX14A6G filing with the United States Securities and Exchanges Commission (SEC), the executive director of CTW Investment Group Dieter Waizenegger has asked Activision Blizzard investors to vote against the "Say-On-Pay" proposal to be voted on at the firm's upcoming AGM on June 11th. This is when shareholders have the right to vote on how a company's execs are compensated.

CTW claims that Activision Blizzard's CEO Robert Kotick (pictured) receives multiple, overlapping rewards, as well as pointing out that the company made huge layoffs in 2019 – to the tune of some 800 employees globally – and that he is paid considerably more than his staff.

Kotick appeared on the Top 100 Most Overpaid CEOs list in 2019 for the second time alongside EA boss Andrew Wilson

"Over the past four years, Activision Blizzard CEO Robert Kotick has received over $20 million in combined stock/option equity per year. These equity grants have consistently been larger than the total pay – the sum of base salary, annual bonus, and equity pay – of CEO peers at similar companies," Waizenegger wrote.

"Specifically, over the past four years, Kotick has received $96.5 million cumulatively in combined stock/option awards alone. In just 2019, he received over $28 million in combined equity, primarily consisting of options – over $20 million – that are substantially 'in the money.' While equity grants that exceed the total pay of peer companies would be objectionable in most circumstances, it is of special concern in this case because Activision Blizzard employees face job insecurity following layoffs of 800 employees in 2019, and typically earn less than a third of one per cent of the CEO’s earnings, with some employees, such as junior developers, making less than $40,000 a year while living in high-cost areas such as southern California.

"Kotick’s employment agreement with Activision Blizzard contains multiple, overlapping award provisions. One such provision is the 'Shareholder Value Creation Incentive' which allows most equity awards granted to Kotick in 2017, 2018 or 2019 that are outstanding to immediately vest at maximum performance (plus an accelerated payment within 120 days of any annual equity grants remaining to be made through 2021 also assuming maximum performance), if at any time prior to December 31th, 2021 the average closing price of Activision Blizzard’s shares exceeds two times the average closing price during the fourth quarter of 2016 for 90 consecutive trading days – i.e. increasing from $39.98 to $79.96 per share.

"While doubling the company’s stock price is a laudable goal, the achievement does not justify such generous rewards. An equity award scheme that allows 'multiple bites at the apple' for past unearned equity, as well as acceleration of equity that hasn’t yet vested, is antithetical to pay for performance."

The vote over "Say-On-Pay" was detailed in a DEFA14A filing with the SEC, in which Activision Blizzard wrote that advisory firm Glass Lewis had recommended shareholders vote for the proposal, while Institutional Shareholder Services has advised for the opposite. Activision Blizzard claims that "the ISS analysis is faulty."

On April 24th, 2020, the company filed its DEF14A filing with the SEC for the 2019/20 financial year. This gives shareholders the information they need to vote on the matters raised at the annual meeting. In it, publicly traded companies must disclose the ratio of their CEO's compensation against the median employee at the firm.

In it, Activision Blizzard reveals that Robert Kotick was compensated to the tune of $30,122,896 during the financial year ending March 31st, 2020, which is 319 times the amount the median employee was paid.

Update: In a statement to GameSpot, Activision Blizzard said: "During Mr Kotick's tenure – which is the longest of any CEO of a public technology company – Activision Blizzard’s market capitalisation has increased from less than $10 million to over $53 billion dollars. In the last five years, Activision Blizzard's share price has outperformed the S&P 500 by more than 120 per cent and over the past 20 years, under Mr Kotick’s leadership, Activision Blizzard’s share price has outperformed the S&P 500 by over 11,000 per cent."

The company continued: "Over 90 per cent of Mr Kotick’s proxy reported compensation is performance-based, and he has delivered exceptional value for Activision Blizzard’s stockholders. Our equity dilution rates remain among the lowest of our peer group."

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.