Shareholders call on Activision Blizzard CEO to resign after employee walkout

The embattled boss of the video game company Activision Blizzard is facing a shareholder rebellion one day after employees staged a walkout to protest about the company’s response to sexual misconduct allegations at the firm.

“In contrast to past company statements, CEO Bobby Kotick was aware of many incidents of sexual harassment, sexual assault and gender discrimination at Activision Blizzard, but failed either to ensure that the executives and managers responsible were terminated or to recognize and address the systematic nature of the company’s hostile workplace culture,” a group of shareholders, led by the Strategic Organizing Center (SOC) Investment Group and holding a total of 4.8m shares, wrote in a letter shared on Wednesday with the Washington Post.

In addition to demanding Kotick’s resignation, the shareholders called for the board’s two longest-serving directors, Brian Kelly and Robert Morgado, to retire by the end of the year.

The letter follows a report in the Wall Street Journal on Monday that claimed Kotick had been aware of some of the sexual misconduct behavior at the company for years. That report came on the same day that 110 employees walked out of the company’s Blizzard Entertainment headquarters in Irvine, California, after Kotick had described the Journal report as misleading in a video message distributed to employees.

Activision is one of the largest and most successful makers of video games, with titles including Call of Duty and Warcraft among its products. With a market valuation of more than $50bn, it is the second largest US-headquartered game company after Microsoft with revenues of $8.1bn last year.

Allegations against the company’s leadership center on its alleged failure to take action over an email the company received in July 2018 in which a former employee at Sledgehammer Games, an Activision-owned studio, alleged that her client had been raped by her male supervisor in 2016 and 2017 after being induced to consume alcohol at work and at work-related events.

The employee reported the incidents to Sledgehammer’s HR department and supervisors, but no action was taken. Activision reportedly settled with the woman but Kotick did not inform the company’s board.

The incident followed a number of similar alleged incidents of sexual assault and mistreatment of female employees which Kotick has also told directors and other executives he was not aware of. But according to the Journal, some departing employees who were accused of misconduct were praised when they left the company, while co-workers were encouraged to remain silent.

The company is currently being investigated by the Securities and Exchange Commission into how it has handled reports of misconduct and the California department of fair employment and housing filed a lawsuit over the summer alleging numerous complaints of harassment, discrimination and retaliation had been ignored by the company.

Among those, was a complaint in 2020 by 30 female employees who said that women had been subjected to unwanted touching, demeaning comments, exclusion from important meetings, and unsolicited comments on their appearance.

Rejecting the characterization that Activision is dominated by a “frat boy” culture, Kotick said: “I am very committed to making sure we have the most welcoming, most inclusive workplace in the industry.”

But Wednesday’s shareholder letter warned that if Kotick, Kelly and Morgado refused to step down, the activists would refuse to vote for the re-election of the board next year.

“After the new revelations, it’s clear that the current leadership repeatedly failed to uphold a safe workplace – a basic function of their job,” the SOC executive director, Dieter Waizenegger, said in an interview with the Post. SOC holds a small fraction of Activision’s roughly 779m shares, with investment giants Vanguard holding 64m and BlackRock, 58m.

“You need to have a clear governance failure,” he told the Post. “And now we believe, we can point to not only an overpaid CEO, but we have very clear implications for recruiting talent at the company, and potential legal ramifications, with regulators like the California agency and the Securities and Exchange Commission … that’s an indication that something went very wrong.”

Kotick, 58, is one of the highest-paid chief executives of a US public company, with a pay package valued at $154m in 2020. After the initial reports of sexual harassment surfaced, Kotick said he would ask the board to cut his compensation to $62,500.

A long-term female employee, Jennifer Oneal, was named to be co-head of the firm, but a month later she said she had no faith the company would “prioritize our people the right way” and said she, too, had been sexually harassed early in her career at Activision.

“I have been tokenized, marginalized and discriminated against,” Oneal, who is Asian American and gay, wrote.

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