Activision Blizzard Shareholders Call for CEO Bobby Kotick’s Resignation

The group also called for an overhaul of the company's board. "The time for timidity and silence, if there ever was one, has clearly passed."
November 17, 2021, 6:02pm
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One day after Activision Blizzard employees walked out in protest after learning of CEO Bobby Kotick’s knowledge of past sexual-misconduct claims at the company, a group of powerful shareholders have demanded that the company’s long-time and controversial leader resign. 

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The group, which reportedly owns nearly 5 million shares of the video game company, sent a letter to Activision Blizzard’s board of directors Wednesday—first reported on by the Washington Post—lambasting the board for standing by Kotick after a Wall Street Journal investigation revealed Kotick knew of allegations of harassment and abuse at Activision Blizzard and hid them from the board. The group claims the board enabled Activision Blizzard’s “frat boy” culture since then, in part by remaining “almost entirely silent” throughout investigations related to past bad alleged misconduct at the company. 

“Our company faces an unprecedented workplace crisis of its own making,” the letter states, adding later, “The time for timidity and silence, if there ever was one, has clearly passed, and it is time for the Activision Blizzard board of directors to step forward or step aside.”

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The letter, representing a diverse group of shareholders, was spearheaded by the activist Strategic Organizing Center Investment Group, a Washington, D.C.-based group that acts on behalf of union pension funds, which reportedly own 3.8 million shares in the company, just a fraction of the company’s total shares, which now sit close to 80 million.The group often calls for reforms to executive compensation; it has called for such reforms at Activision Blizzard in the past.

Activision Blizzard, which has developed popular video games including World of Warcraft and Call of Duty, did not respond to a request for comment about the letter. 

The shareholders said that the board’s Tuesday decision to back Kotick raised “serious questions of whether Activision’s board is acting in the best interest of long-term shareholders,” as did the board’s inaction after a lawsuit filed by California’s Department of Fair Housing and Employment alleged the company was a “breeding ground for harassment,” which led to a walkout. 

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The suit was settled out of court for $18 million and Kotick said at the time that media coverage presented a “distorted and untrue picture of our company.” But the Journal uncovered documents that showed Kotick knew of at least some of the claims put forth in the lawsuit, and the shareholders said Wednesday that suspected the board might have as well.

“We find it implausible that sexist, discriminatory, and unlawful practices as widespread as those alleged in the California DFHE lawsuit could have occurred without the board’s knowledge if the board had appropriate oversight practices in place,” the Wednesday letter states. 

As a result, the group is asking for additional action to alter the makeup of the board. The letter notes that half of the current directors have been on the board for 18 years or more, a length of time that may “compromise” the board and not allow it to act as independently from management as it should. Consequently, the latter requested the resignation of chairman Brian Kelly and lead independent director Robert Morgado, both of which have filled various roles at the company since the 1990s.

The group additionally asked for an immediate search for “more qualified replacements”; the addition of a non-executive employee to the company’s board; and an independent investigation into the board’s oversight policies and practices.

The board said Tuesday that it “remains confident that Bobby Kotick appropriately addressed workplace issues brought to his attention” and said the company had already instituted “a zero tolerance harassment policy, a dedication to achieving significant increases to the percentages of women and non-binary people in our workforce and significant internal and external investments to accelerate opportunities for diverse talent.”

Kotick himself issued a statement as well Tuesday, stating “anyone who doubts my conviction to be the most welcoming, inclusive workplace doesn’t really appreciate how important this is to me.” 

“We’ve taken meaningful actions to improve our company and our culture. But there is more to do,” Kotick said in the statement. “To become the model workplace we all aspire to be, more change is required. But I am so confident we will get there.”

Should the board not take action to remove Kotick, Kelly and Morgado, the shareholders said, they plan to vote against the re-election of all of the board’s directors and ask for Kotick’s pay to be permanently cut.