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Activision Blizzard Shareholders Demand Kotick’s Removal, but Company Leadership isn’t Budging

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In July, Activision Blizzard was sued by California’s Department of Fair Employment and Housing after a two year-long investigation found evidence of widespread and prolonged harassment and discrimination against employees, and since then, the company has been slipping from one controversy to the next. Most recently, a report by The Wall Street Journal shed light on more problematic issues at the company, most notably with CEO Bobby Kotick himself, who was allegedly aware of the issues at the company, withheld knowledge of them from the Board of Directors, protected abusers, and abused and mistreated employees and women himself.

Since then, Activision Blizzard employees have spoken out against company leadership, demanding the resignation of Kotick. Another new development has put more pressure on the executive, with a group of Activision Blizzard shareholders representing $329 billion in assets demanding Kotick’s removal as well. In a letter written by the SOC Investment Group and sent to the Activision Blizzard board, the group demands that in addition to Kotick’s resignation, the company’s Board’s Chairman Brian Kelly and Lead Independent Director Robert J. Morgado retire, with a deadline set by the group for December 31.

“Our company faces an unprecedented workplace crisis of its own making,” the letter reads. “As new reporting indicates, and 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 systemic nature of the company’s hostile workplace culture. Moreover, and despite numerous government investigations, settlements, and top executives’ departures that have negatively affected both the company’s public reputation and its share price, the board has been almost entirely silent.

“We, therefore, call on Mr. Kotick to resign as CEO of the company, and on the board of directors to take responsibility for failing to recognize and address what the California Department of Fair Employment and Housing has described as a ‘frat boy’ workplace culture to flourish. In order to ensure that the board has leadership capable of leading this effort, we urge Chairman Brian Kelly and Lead Independent Director Robert J. Morgado to announce their retirement no later than December 31, 2021. The board should start a search for more qualified replacements immediately.”

The SOC Investment Group writes that should the steps mentioned above not be taken, it will not support the re-election of incumbent directors, and will urge other investors to do the same.

“Activision Blizzard is at a crossroads, and we call on the independent directors to lead the company’s ongoing response to the sexual harassment crisis,” the group writes. ” Absent the termination of Mr. Kotick and the thoroughgoing overhaul of the board of directors described above, we would be unable to support the re-election of incumbent directors and would urge our fellow shareholders to do the same. The time for timidity and silence, if there ever was one, has clearly passed, and it is time for the Activision Blizzard board of directors to step forward or step aside.”

It seems, however, that Activision Blizzard leadership is continuing to defend Bobby Kotick and remains reluctant to have him removed from his position. As revealed in a report published by Game Developer, the company recently livestreamed an all-hands meeting in which leadership fielded pre-screened questions submitted by employees. When asked about whether the zero tolerance policy against sexual harassment laid out by Bobby Kotick will apply to himself, the company said it did not “have evidence” of claims that have been made against Kotick in the recent WSJ report, because the incidents in question happened over a decade ago.

The incidents in question involved Kotick harassing and threatening to “destroy” a woman who was suing the pilot of a plane co-owned by him for sexual harassment, while another incident saw him making a death threat to one of his assistants. While those did happen over a decade ago, the WSJ report also cited more recent incidents, such as Kotick being aware of the alleged rape of a Sledgehammer Games employee by a male superior and choosing to keep the information from the company’s Board, as well as him blocking the firing of Treyarch studio head Dan Bunting (who stepped down two months ago) even after Activision HR found him guilty of sexual harassment and advised that he be let go.

Several other troubling workplace practices at Activision Blizzard have also come to like via WSJ’s report. Blizzard Entertainment co-lead Jen Oneal, who left the company just three months after being promoted to her new role, is said to have been felt “tokenized, marginalized, and discriminated against”, and was apparently not offered pay equal to that of her fellow co-lead Mike Ybarra until after she had tendered her resignation.

Recently, PlayStation CEO Jim Ryan also criticized Activision Blizzard for its “deep-seated culture of discrimination and harassment” in an email sent out to PlayStation staff. Read more on that through here.

Activision Blizzard has been fighting legal battles on multiple fronts over recent controversies. In addition to the DFEH lawsuit, the company is also facing a class action lawsuit from investors for its failure to disclose its workplace issues, while the SEC is investigation it for the same.

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