Activision faces controversy over CEO’s $ 155m paycheck after the vote was rigged

Activision Blizzard casts a disputed vote on its chief executive $ 155m paid package Monday after delaying the meeting in what critics say was an effort to avoid an embarrassing rebuke.

The video game company postponed the no-obligation vote “tell you to pay” after its regularly scheduled annual meeting on June 14, delaying for a week the shareholders ’verdict on Bobby Kotick’s salary. Proxy advisor Glass Lewis said he knew no precedent for such a move.

Activision said it wanted to counter “misleading” statements about its pay practices and highlighted the changes it had already made to Kotick’s pay in response to shareholder feedback. The company declined to comment further, but its decision drew analysts and angered investors.

“If we are serious about the shareholder voting franchise, the desire for a different outcome may not guide decisions on upgrading,” said Glenn Davis, deputy director at the Institutional Investors Council. , which represents pension funds.

“I don’t see a good reason to do this,” said Neil Macker, a Morningstar analyst who covers Activision. Although rare, large companies occasionally don’t pay the votes “and people pass,” he said. Delaying the vote, “all it does is attract attention,” he argued.

Typically, investors approved executive pay plans with at least 90 percent support, but Activision had kept the risk of losing the vote this year. Only 56.8 percent of its shareholders support its pay for 2019 and proxy advisors Institutional Shareholder Services and Glass Lewis advised investors to vote against their 2020 pay.

Most of Kotick’s $ 155 million package was in premiums linked to a 2016 goal of doubling its market capitalization. Activision shares have hit that target after jumping 58 percent in 2020 when co-opted consumers turned to their famous franchises, from World of Warcraft to Crash Bandicoot. A strong action show typically appeases investors shocked by excessive executive pay, but Kotick’s large rewards have raised concerns.

Although Activision has made substantial changes to address the CEO’s pay problems, its total pay is 2.55 times the median of the company’s peers, the ISS said. It was also 1,560 times that of Activision’s median employee, in addition to a 319: 1 ratio in 2019.

A meeting update may be appropriate in some cases, such as when a late development alters the facts in a proxy contest or an M&A proposal, CII’s Davis said, adding “Activision is not one of those cases.”

The delay in the vote appears to be “a sign of despair” and a last-ditch effort to arm investors in torsion with the company to Kotick’s advantage, a discontinued director told Activision.

Governance experts said voting updates on other issues were also rare, but pointed to a 2000 case in which the Wisconsin investment council cited Peerless Systems as the cause after the technology company has cast a vote on an action option plan. This gave him more time to ask for enough support for the motion to pass.

The parties settled in, but not before the Delaware Chancellor’s Court ruled that “updates that are specifically intended to interfere with the results of a valid vote for the shareholder will better raise deep-seated suspicions,” and they stated that the boards should have a “convincing justification” for such delays.

Following last year’s tight pay vote, Activision has doubled its spread to institutional investors in terms of executive pay. “But frustrating and ironic, because of the extraordinary performance of the company’s shares, the equity premiums seem high,” said Betty Huber, a lawyer with Davis Polk.

Although the payroll is not binding, Activision seemed to require investors to look at the pay changes the company has made and its strong stock performance, he said.

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