Investment group: Excessive bonuses render Activision Blizzard CEO's paycut moot

The investment group CtW has spoken out against the terms of Activision Blizzard CEO Bobby Kotick's contract extension, arguing that a number of other unaddressed provisions more than make up for any pay lost in Kotick's recent 50 percent salary reduction and urging shareholders to vote against the package.

Kotick himself regularly earns in the millions from his role as Activision Blizzard's CEO, earnings that often veer into controversy when, for example, the company opts to lay off hundreds of developers during years of record earnings.

Even outside of the game industry, Kotick's pay, its relation to median salaries at Activision Blizzard, and shareholder opposition for his pay packages have landed him on lists like As You Sow's 'Most Overpaid CEOs' multiple times.

Kotick did notably took a seemingly sizable salary reduction for both fiscal 2021 and 2022, dropping his annual base pay from $1.75 million to $875,000. That shift was announced just a few months ago, but the investor group say that a short-term reduction in salary doesn't address longstanding shareholder concerns with how much Activision Blizzard pays its executives.

While his salary is down significantly from years past, his contract still allows him to walk away with bonuses of up to 200 percent of his salary if certain company goals are met. CtW says that incentives like mean Kotick is unlikely to see a long-term reduction in earnings and that it "essentially renders the new equity compensation reductions moot."

The threshold for the Shareholder Value Creation Inventive, for example, has already been met by Activision Blizzard, meaning Kotick's actual income won't see a meaningful reduction in 2021. It's possible he'll earn comparably less still in 2022, but since this latest contract extension only covered a few years his salary can be renegotiated, and potentially raised once again, in 2023.

In CtW's eyes, these factors don't represent an earnest desire to lower Kotick's pay.

"Further, the substantial payouts for Mr. Kotick’s 2020 and 2021 awards alone are so large that they severely undermine the contractual reductions that apply largely to 2022," argues CtW in an open letter urging shareholders to vote against the 'Say on Pay' proposal. "Mr.Kotick has already received a windfall sufficiently large enough to cover reductions in pay through early 2023 because of the Shareholder Value Creation Incentive. "

"Mr. Kotick’s 2020 equity grant had a target value of $28 million, which proxy advisor Institutional Shareholder Services notes is higher than the median total pay of CEOs in the company's peer group ($23.4 million). The award has a realized value of nearly $124 million," continues CtW. "Similarly, Mr. Kotick also received his award intended for 2021 in 2020, with a grant date value of over $25 million and a maximum payout value of over $32 million."