Activision Blizzard CEO cuts his salary, waives arbitration in letter

Activision Blizzard CEO Bobby Kotick, in a letter to employees published Thursday, pledged that major changes are coming to the video game publisher, including a “new zero-tolerance harassment policy,” the waiving of required arbitration of sexual harassment and discrimination claims, and a major pay cut for Kotick. He’s asking Activision Blizzard’s board of directors to slash his salary — and his overall total compensation — to $62,500 “to ensure that every available resource is being used in the service of becoming the industry leader in workplace excellence.”

Kotick had earlier this year agreed with the company to reduce his 2021 base salary from $1.75million to $875,000. Kotick also received nearly $150 million worth of stock awards, making his total compensation for this year $156.9 million.

Now, Kotick says he’s asked the company’s board to keep his compensation at that the minimum level allowed by law “until the Board has determined that we have achieved the transformational gender-related goals and other commitments” described elsewhere in his letter. He told employees that “five new changes” are being implemented at the company, citing the Equal Employment Opportunity Commission’s investigation into Activision Blizzard, “public discussion on discrimination and harassment,” and employee reports and feedback.

They include:

1. Company-wide, we are rolling out a zero tolerance harassment policy – In the past, when we discovered and substantiated harassment, we terminated some employees and provided verbal or written warnings or different disciplinary actions to others. Retrospectively, we see that this is not the best way to reach our workplace excellence goals. To ensure that reports are handled properly and that discipline is swift and appropriate, we need to have stricter guidelines and a more consistent approach across the company. We have implemented a Zero-Tolerance Policy across Activision Blizzard. This policy will be consistently applied. It is our goal to implement the best harassment prevention and non-retaliation policies for any employer. We will keep reviewing and improving these standards wherever we go. Activision Blizzard employees who are found to have retaliated against any person for filing a complaint about compliance will be fired immediately. For many other cases of workplace misconduct we won’t rely on writing warnings. We will terminate all employees, regardless of whether they are harassed based upon any protected class. All future equity awards and employment contracts will state clearly that any termination due to these circumstances will immediately result in forfeiture of future compensation. Employees who report harassment and retaliation will be encouraged, protected, heard, and listened to. All reports regarding harassment and retaliation will be investigated. We also want to see if Activision Blizzard staff who received such a report took all necessary steps to ensure the integrity of our compliance systems. These measures may not be allowed in certain countries. These cases will be dealt with using the strictest discipline possible and the highest standards.

2. Our workforce will be 50% more female- and nonbinary by 2020. We also plan to invest $250 Million in diverse talent opportunities. – Today, approximately 23% of our global employee population identifies as women or non-binary. Building on the success that King and other business units have achieved, we will seek to increase our percentage of women and non-binary professionals by approximately 50% – to more than one-third across the entire company – within the next five years and hopefully faster. Every franchise, every business unit and each functional area must have plans in place to achieve this goal. We are proud of our diversity performance, which is better than the average American workforce, where 30% of us work in diverse and under-represented areas. However, I will not stop striving to improve this. This includes my business units, franchise leaders, company leadership, and all levels of management. To further this commitment, we’ll be investing an additional $250 million over the next 10 years in initiatives that foster expanded opportunities in gaming and technology for under-represented communities. This includes empowering diverse talent to seek career opportunities in gaming via an ABK Academy. The academy includes mentoring for participants and partnership with colleges and technical school serving under-represented community. There is also a rotating apprenticeship program leading to job openings in game development, much like the programs we established with the United Negro College Fund, Management Leadership for Tomorrow, and Management Leadership for Tomorrow. To increase our number of female and under-represented people in senior positions within the company, we will offer learning, development and advanced degrees opportunities to current employees. Brian Bulatao and Julie Hodges will be sharing details with you about our plans to operationalize these goals, as well as how we plan to measure and implement this increased investment over the next few months.

3. We have decided to waive arbitration for sexual harassment or discrimination claims based on employee feedback – For any Activision Blizzard employee who chooses not to arbitrate an individual claim of sexual harassment, unlawful discrimination, or related retaliation arising in the future, the company will waive any obligation to do so.

4. We intend to continue increasing visibility regarding pay equity – As described in the recent note from our President, Daniel Alegre, and our Chief Administrative Officer, Brian Bulatao, the company continues to focus on pay equity for employees. Our U.S. analysis found that the average salary for women working in similar jobs was slightly higher than their male counterparts. These results will be reported annually to ensure transparency about our ongoing commitment to equity in pay.

5. We’ll keep you posted on the progress of our projects. – We will be monitoring the progress of our business units, franchise teams, and functional leaders with respect to workplace initiatives and we will provide a status report quarterly. This vital work will also be highlighted in the annual shareholder report and our ESG annual report, which includes information about workplace progress, gender diversity, hiring and hiring.

Kotick sent a letter in which he apologized again to his employees. He also thanked them for their work under double difficult conditions.

“I truly wish not a single employee had had an experience at work that resulted in hurt, humiliation, or worse – and to those who were affected, I sincerely apologize,” Kotick said. “You have my commitment that we will do everything possible to honor our values and create the workplace every member of this team deserves.”

Following a 2-year investigation, Activision Blizzard received a lawsuit from the California Department of Fair Employment and Housing in July. The suit alleges that Activision Blizzard allegedly fostered a “frat boy culture” that allowed for gender-based discrimination and sexual harassment. The lawsuit names several top executives including J. Allen Brack (ex-president of Blizzard) as being involved in the alleged behaviour. Both the investigation and lawsuit are still ongoing.

Shortly after the lawsuit went public, Activision Blizzard made an official statement in which it said the lawsuit included “distorted, and in many cases, false, descriptions of Blizzard’s past.” Activision Blizzard CEO Bobby Kotick later apologized for the company’s “tone deaf” response to the accusations, and the company hired a law firm to audit the company’s “policies and procedures.” Upset with leadership response, Activision Blizzard workers sent an open letter to executives and walked off work in protest.

Activision Blizzard shareholders brought a separate suit in August against Activision Blizzard alleging that the negligent leadership caused share price declines. DFEH added to its initial complaint and accused Activision Blizzard with suppressing evidence. Activision Blizzard was also explicitly included in some of the language used throughout the lawsuit. Activision Blizzard denied destroying evidence.

Activision Blizzard also came under multiple federal investigation by the U.S. Securities and Exchange Commission, (SEC), and Equal Employment Opportunity Commission. For $18 million, the company reached a settlement with the former.