Investment watchdog and Activision-Blizzard shareholder CTW Investment Group calls out Bobby Kotick's huge salaries, and prompts investors to vote against a new compensation package for the CEO.
According to the CTW Investment Group's director Dieter Waizenegger, Activision's CEO Bobby Kotick makes way too much money. In 2019, Kotick ranked #45 on the highest paid CEOs, and managed to rake in over $28 million throughout the year. As Activision-Blizzard's coffers swelled to billion-dollar proportions throughout the years, so too has Kotick's payouts, which grew to nearly $100 million across four years.
CTW, an activist firm aimed at equalizing pay and fair treatment of workers, owns active shares in Activision-Blizzard and called the company out in a recent SEC filing. The firm basically states that Kotick is raking in too much compensation in comparison to its workers. Waizenegger makes a compelling argument and puts numbers into perspective and gives a closer look at the inner workings of the company's executive structure.
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.
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 1/3 of 1% 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.
Activision was quick to defend Kotick's compensation, saying that the CEO is responsible for incredible growth. Since Kotick's payouts are tied to performance, he's getting paid a hefty sum.
Here's what an Activision rep told Gamespot:
"During Mr. Kotick's tenure--which is the longest of any CEO of a public technology company--Activision Blizzard's market capitalization has increased from less than $10 million to over $53 billion dollars"In the last five years, Activision Blizzard's share price has outperformed the S&P 500 by more than 120% and over the past 20 years, under Mr. Kotick's leadership, Activision Blizzard's share price has outperformed the S&P 500 by over 11,000%.
"Over 90% of Mr. Kotick's proxy reported compensation is performance-based, and he has delivered exceptional value for Activision Blizzard's stockholders. Our equity dilution rates remain among the lowest of our peer group."
It's true that the company has grown to titanic proportions under Kotick's leadership, expanding to one of the top gaming forces in the industry with an established billion-dollar service empire.
The company routinely makes $5-6 billion every year--except in 2018, where it made over $7.5 billion as it simultaneously fired 800 employees--thanks to its wealth of live services.
In 2019 alone, Activision made $1.9 billion in net income on the back of $3.36 billion in microtransactions and $6.3 billion in total revenues.
Until the policies are changed, Kotick's earnings will be proportionate to the company's revenues. And honestly I don't see investors changing any of these as long as the company keeps making them money.