Activision Blizzard is pushing back against reporting by the Wall Street Journal that its chief executive officer Bobby Kotick has known about sexual misconduct allegations at the video game publishing giant for years.
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Shares fell over 5% on Tuesday as the Journal cited interviews with former employees and others familiar with the company and internal documents, including memos, emails and regulatory requests, which reportedly show that Kotick did not inform the board about everything he knew regarding sexual misconduct allegations against the company, even after regulators began investigating claims in 2018.
In addition, the outlet reports that Kotick himself has been accused by several women of inappropriate behavior both outside and inside the company over the years and, in some instances, has worked quickly and quietly to settle complaints, citing people familiar with the incidents and internal documents. The Journal noted that, in 2006, one of Kotick's assistants accused him of harassment after he allegedly sent a voice mail threatening to have her killed. Sources reportedly said the matter was settled out of court.
An Activision Blizzard spokesperson told FOX Business that the WSJ report "presents a misleading view of Activision Blizzard and our CEO."
"Instances of sexual misconduct that were brought to his attention were acted upon. The WSJ ignores important changes underway to make this the industry’s most welcoming and inclusive workplace and it fails to account for the efforts of thousands of employees who work hard every day to live up to their – and our - values," the spokesperson explained. "The constant desire to be better has always set this company apart."
The recent turmoil within the company, which is known for producing ‘World of Warcraft’ and the ‘Call of Duty’ franchise, was sparked by a lawsuit by the California's Department of Fair Employment and Housing in July which claimed the company paid its female employees less than their male counterparts, provided them with fewer opportunities to advance, fostered a "frat boy workplace culture" and ignored complaints by female employees of blatant harassment, discrimination and retaliation.
The company called CDFEH's allegations "distorted, and in many cases false, descriptions of Blizzard’s past," prompting a petition by over 2,000 current and former workers. Following the backlash, Kotick issued a lengthy apology over the company's "tone deaf" response and promised changes would be made to improve its workplace culture, but it was not enough to stop an employee walkout over the issue.
In addition to the CDFEH lawsuit, Activision Blizzard has been caught in the crosshairs of regulators and ABetterABK, a group of employees who filed a complaint with the National Labor Relations Board in September accusing the company of union busting and worker intimidation. Shareholders have also filed a class action lawsuit alleging the company "artificially inflated" the value of the its stock and made "false and misleading statements" by withholding the complaints of harassment, discrimination and retaliation.
The Securities and Exchange Commission has subpoenaed Kotick and other company executives over their disclosures regarding employment matters and related issues. Meanwhile, the Equal Employment Opportunity Commission and Activision Blizzard reached an $18 million settlement after the agency accused the company of subjecting female employees to sexual harassment, retaliating against them for complaining about harassment, and paying female employees less than male employees. The settlement agreement will be enforced by an outside monitor.
Last month, Activision Blizzard instituted a zero-tolerance harassment policy and outlined a series of new goals and commitments to improve its workplace culture, including increasing its global workforce of women or non-binary employees by approximately 50% within the next five years and investing approximately $500 million towards accelerating opportunities for diverse talent and expanding workplace initiatives for under-represented communities. Activision also said it will waive required arbitration of sexual harassment and discrimination claims and will increase transparency related to pay equity.
In addition, Kotick, who dated Facebook's Sheryl Sandberg who is now married to someone else, asked the board to reduce his overall compensation to $62,500, the lowest amount permitted by California law for individuals earning a salary, until the new goals and other commitments have been met. He noted that he would not receive bonuses or be granted any equity during that time.
"We are moving forward with unwavering focus, speed, and resources to continue increasing diversity across our company and industry and to ensure that every employee comes to work feeling valued, safe, respected, and inspired," the spokesperson added. "We will not stop until we have the best workplace for our team."
Activision Blizzard's board of directors said they remain committed to "making Activision Blizzard the most welcoming and inclusive company in the industry" and expressed confidence that Kotick "appropriately addressed workplace issues brought to his attention" and will be able to achieve the company's new goals.
More than 20 employees have exited the company, including Blizzard president J. Allen Brack, and another 20 employees have faced other types of disciplinary action since allegations against the company surfaced in July.
One of Brack's successors, Jen Oneal, also recently said she would step away from her new co-lead role at Blizzard and leave the company at the end of the year. According to the Journal, Oneal sent an email to leadership last month expressing a lack of faith in turning the company's problems around, adding, "It was clear that the company would never prioritize our people the right way." Oneal added that she herself has been "tokenized, marginalized, and discriminated against" during her Activision career and that she was paid less than her male counterpart leading Blizzard, Mike Ybarra.
ABetterABK, who is now calling for Kotick's resignation, tweeted that they will stage a walkout on Tuesday in response to the allegations raised in the Journal's report.
"We will not be silenced until Bobby Kotick has been replaced as CEO, and continue to hold our original demand for Third-Party review by an employee-chosen source. We welcome you to join us," the employees said. "Under Bobby Kotick's leadership the company has been accused of mistreatment, sexual harassment, rape, and a death threat made by Kotick himself. The board is just as complicit if they let this slide. It's past time for Bobby to step down."