A group of Activision Blizzard shareholders have penned a letter calling for CEO Bobby Kotick, board chairman Brian Kelly and lead independent director Robert Morgado to resign by the end of the year.
The letter comes in response to new allegations raised in a Wall Street Journal article that Kotick knew about sexual misconduct claims for years but did not inform the board of everything that he knew. The Journal also reports that Kotick himself has been accused by several women of engaging in inappropriate behavior over the years, including allegedly threatening to have one of his assistants killed.
The latest allegations follow a discrimination lawsuit in July from the California's Department of Fair Employment and Housing and a class action lawsuit from Activision Blizzard shareholders over the company's handling of sexual misconduct claims as well as a complaint filed with the National Labor Relations Board accusing the company of union busting and worker intimidation.
Activision Blizzard reached an $18 million settlement after the Equal Employment Opportunity Commission 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. Meanwhile, the Securities and Exchange Commission has subpoenaed Kotick and other company executives' over their disclosures regarding employment matters and related issues.
"Beyond justifying Mr. Kotick’s termination, this growing list of investigations and grave allegations raises serious questions of whether Activision Blizzard’s board is acting in the best interest of long-term shareholders," the group of shareholders wrote. "We find it implausible that sexist, discriminatory, and unlawful practices as widespread as those alleged in the California DFHE lawsuit could have occurred without the board’s knowledge if the board had appropriate oversight practices in place. For this reason, we ask for an immediate independent investigation of the board’s oversight policies and practices."
In addition to retaining an independent expert to conduct the review of the board, shareholders are asking for the following:
- A commitment to a thorough refreshment of the board to increase diversity and inclusion, a key element of which should be the nomination of a non-executive Activision Blizzard employee, selected through a fair and open process by the Activision Blizzard workforce, to serve as an Employee Director subject to election at the next annual meeting.
- Implementation of the voluntary reduction of Kotick's pay for at least five years, which will be auto-renewed if new workplace goals are not met.
- Clarification on whether any other executives will accept similar reductions or if the company will eschew granting bonuses for the upcoming year.
The letter is signed by the Shareholder Association for Research & Education (SHARE), NEI Investments, Verve Super, Future Super, and SOC Investment Group, who represent $329 billion in assets under management or advisory and constitute a small fraction of the company's 778.89 million outstanding shares. SOC holds approximately 3.8 million Activision Blizzard shares and NEI Investments holds less than 100,000 shares.
The shareholders, who are asking for a response from the company by Dec. 20, said they would not support the re-election of incumbent board directors if the demands are not met.
The letter comes after more than 150 employees walked out on Tuesday for the second time since July in response to the latest allegations. Over 500 current employees and contractors have also signed a petition calling on Kotick to resign.
Activision Blizzard, who did not return FOX Business' request for comment on the letter, previously said that the Wall Street Journal "presents a misleading view" of Kotick and the company and that "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 company added. "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. We will not stop until we have the best workplace for our team."
Activision Blizzard's board of directors also expressed confidence that Kotick "appropriately addressed workplace issues brought to his attention" and in his leadership, commitment and ability to achieve the company's new goals to improve its workplace culture.
|ATVI||ACTIVISION BLIZZARD, INC.||56.93||-0.36||-0.63%|
Shares of Activision Blizzard have fallen approximately 30% year-to-date as of Thursday.