Earlier today, it was reported that Activision-Blizzard had laid off 50 of its employees that were involved with live events. After that, Jason Schreier revealed on Twitter that the laid-off employees had received $200 gift cards for the company's Battle Net store. Against all this turmoil, Bobby Kotick, CEO of the company, is set to benefit from a loophole that will see him given almost $200 million.
Activision-Blizzard has continued to lay-off employees and close down studios over the last few years, yet the company continues to report rising profits year after year. As the CEO, Bobby Kotick has overseen all of these decisions, and has also apparently failed to meet the company's required benchmarks. Despite this, Bobby Kotick will be rewarded anyway, much to the chagrin of shareholders.
According to CtW Investment Group, Bobby Kotick can obtain this payout of almost $200 million due to the “Shareholder Value Creation Incentive” provision in Kotick's employment agreement. Because of this, he is entitled to a full performance equity payout. CtW acknowledges that the company's share price has risen recently. Still, the group believes that the on-going COVID-19 pandemic and the lack of other entertainment options caused this increase more so than any leadership decision. CtW Investment Group's full statement is provided below.
“While the increase in Activision’s stock price is somewhat commendable, as we stated last year and continue to assert, this achievement alone does not justify such a substantial pay outcome for the CEO. There are many factors that may contribute to a rise in this particular company’s stock price that may not be directly attributable to Robert Kotick’s leadership. The use of video games as one of the few entertainment options available amid the covid-19 pandemic, for example, has been a boon to many companies in the gaming industry irrespective of executive talent or strategic decisions.”
CtW has raised concerns about this loophole before. Last June, the investment group urged fellow shareholders to vote to stop the CEO from earning "oversized equity awards." More than 40% of the shareholders sided with CtW in the vote, though it seems that they were unable to change anything at that time. Over the past few years, many have called for Bobby Kotick to be fired, and around the same time as the vote in June 2020, the hashtag FireBobbyKotick began trending on Twitter, but nothing happened.
The pandemic has seen the video game industry soar in popularity and market share, making video games one of the few industries to excel during COVID-19. A fact that supports CtW point is that while Activision-Blizzard's value may be increasing, that is true across the board and does not suggest the success is due to the CEO. It is also understandable why seeing a millionaire make even more millions of dollars while not even achieving their targets may upset many people who have struggled through the pandemic.
While some may argue that those at the top deserve to be paid more and need to be paid competitively, it is hard to defend that the people making the games earn one-third of a percent that CEO Bobby Kotick is earning on average.