“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,” the shareholders, led by the Strategic Organizing Center (SOC) Investment Group, wrote in a joint letter addressed to the company’s board of directors and shared with The Washington Post.
In addition to asking Kotick to resign, the group of shareholders is calling for the board’s two longest-serving directors, Brian Kelly and Robert Morgado, to retire by Dec. 31. Kelly is chairman of the Activision Blizzard board of directors and Morgado serves as lead independent director. The Activision Blizzard board of directors responded to the Journal’s article Tuesday, saying it remained “confident in Bobby Kotick’s leadership.”
Shareholders said in the letter that if Kotick, Kelly and Morgado don’t step down, they would not vote for the reelection of the current directors on the board at the next annual shareholder meeting in June, and they would urge other shareholders to follow. The SOC chose to call for Kelly’s and Morgado’s resignations as they are the two longest-standing members of the board, the group told The Post, with Kelly serving since 1995 and Morgado since 1997.
“After the new revelations, it’s clear that the current leadership repeatedly failed to uphold a safe workplace — a basic function of their job,” SOC executive director Dieter Waizenegger said in an interview. “Activision Blizzard needs a new CEO, board chair and lead independent director with the expertise, skill set and conviction to truly change the company’s culture. We need to really have a reset button on the board.”
Activision Blizzard did not immediately respond to a request for comment.
Waizenegger said the SOC would like to see Kelly and Morgado replaced with diverse directors and for at least one of those seats to go to an Activision Blizzard employee that is not an executive.
The letter was also signed by Australian retail fund Future Super, Canada groups NEI Investments and Shareholder Association for Research and Education (SHARE) and an Australian fund for women, Verve Super. Verve Super did not return inquiries about how many Activision Blizzard shares it owns. The SOC Investment Group, which is based in D.C., communicates with companies on behalf of union pension funds; in this case, those funds own about 3.8 million shares in Activision Blizzard, a small fraction of the game company’s total shares of roughly 779 million. These shareholders are dwarfed by Activision Blizzard’s top investors. Investment management company Vanguard holds over 64 million shares and BlackRock, the world’s largest asset manager, holds 58 million. Vanguard and BlackRock both declined to comment, citing policies to not discuss individual portfolio companies.
NEI Investments said it had decreased the number of shares it manages after the company was sued in July by a California state agency over allegations of sexual harassment, gender-based harassment and pay inequality in the workplace.
“We have materially reduced our exposure to Activision since the story broke this summer. We now have a remnant position in two funds for a collective position that is less than 100,000 shares. But the exposure allows us to demand change through these types of coalitions,” NEI Investments said in a statement to The Post.
SHARE does not hold any shares in Activision Blizzard but said it signed the letter because the investment service is “concerned about the developing story at Activision Blizzard, and [has] been working with other investors and investor representatives to prod reform.” A statement from Future Super said it discussed with the Communications Workers of America, a major media labor union, about how best to support Activision Blizzard workers and decided to sign the SOC letter.
On Tuesday, over 110 employees walked out and protested at the Irvine, Calif., campus of a major Activision Blizzard subsidiary, Blizzard Entertainment, after Kotick dismissed the Wall Street Journal report as misleading in a video message distributed to employees. It was the second employee walkout the company has seen in the past four months following the July lawsuit from the California state agency.
The SOC Investment Group, which represents a coalition of U.S. labor unions, has a track record of calling for executive compensation reform. In 2021, the group campaigned against hefty bonuses for executives at both Activision Blizzard and Electronic Arts, another leading video game company. Organized labor has been keenly interested in Activision Blizzard since the filing of the July suit. In October, a group of Activision Blizzard employees asked Kotick to “voluntarily recognize a union” at the company. Activision Blizzard, like most American video game publishers and developers, is not unionized.
Over the past several months, Activision Blizzard has come under fire from many directions. In addition to the lawsuit from California’s Department of Fair Employment and Housing, it is also under investigation by the U.S. Securities and Exchange Commission and is being sued in an August class-action suit from shareholders alleging violation of federal securities laws. (The SOC Investment Group is not a part of that class-action lawsuit from shareholders.) Additionally, there is an unfair labor practice complaint against the company, filed by Activision Blizzard employees and the Communications Workers of America.
“Votes against directors are very rare. Investors rarely take this step. You need to have a clear governance failure,” Waizenegger said. “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.”