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

Executive director of CTW Investment Group Dieter Waizenegger says that the exec is compensated too highly
Activision Blizzard shareholder claims 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. 

Making bank

"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."

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