Bobby Kotick’s pay cut at Activision is still not enough

Bobby Kotick's pay cut
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Earlier this year, Bobby Kotick’s pay cut at Activision was supposed to address ongoing concerns that he is paid too much. The pressure to reduce his pay was brought about by CtW Investment Group, which “holds directors accountable for irresponsible and unethical corporate behavior” by using the collective power of investment as “an effective voice for accountability and retirement security.”

CtW led the charge criticizing various executive pay practices at the Call of Duty publisher that allowed Kotick to be paid extra for improving performance of company stock which he also benefits from (Shareholder Value Creation Incentive) and another bonus that rewards him when Activision’s market cap is increased for consecutive quarters (Transformative Transaction). CtW argued that Kotick’s combined rewards are consistently larger than those of his peers at similar companies.

So when Kotick signed a new employment extension agreement with the company that saw his base salary and bonuses in half last month, this was largely seen as a victory. Activision said the move “reflects shareholder feedback, incorporates market best practices, and continues to directly connect pay to performance.” But it’s still not enough.

What’s this? A picture of Kevin Spacey as he appears in 2014’s Call of Duty: Advanced Warfare. Why you ask? No reason.

CtW maintains that the employment extension doesn’t really impact total pay as much as it could, with concerns that Bobby Kotick’s pay cut is affixed to a contract that lasts for less than two years, Activision is dodging long-term reforms that are necessary to how they compensate CEOs. In English, that means Kotick is already set to be paid the maximum amount of money from his bonuses such that the only period that will see a meaningful pay reduction is the year of 2022.

That’s one year after decades of gross overpay. CtW said, “[The] extension is not long enough to represent an earnest effort by the Compensation Committee to reduce the CEO’s outsized equity pay over a sustained period.” CtW s now asking shareholders to vote against the “Say On Pay” proposal, and the re-election of Activision’s Compensation Committee chair, effectively holding them in contempt.

While stuff like this is generally seen as bean counter stuff not to be paid much attention to by consumers, I’d argue that it’s worth thinking about the fact that the people who make games like Call of Duty, run communities like World of Warcraft and assist players with services like Battle.Net or do literally anything to make it possible for us to enjoy games are in constant fear of being downsized by Activision for reasons of cost efficiency while it pays people like Kotick ungodly amounts.

Granted, I wouldn’t hold my breath for shareholders to vote in line with CtW’s recommendations. Not when the share price for Activision has grown over the past few years, and when quarterly results are “well ahead of expectations.” Our only hope is that eventually one day Kotick’s overpay — or the bad look it establishes — becomes enough of a liability for them to reconsider.

Source: PC Gamer, Waypoint