Activision Blizzard CEO Bobby Kotick Asks Board To Reduce His Salary And Cut Bonuses Amid Lawsuits

Just days after a judge rejected Activision Blizzard's petition to pause California's lawsuit, the video game company has announced a series of changes it's making to help improve its corporate culture amid ongoing lawsuits related to sexual harassment and discrimination. Additionally, CEO Bobby Kotick said he is asking the board to cut his salary to the lowest level possible for someone in California on a salary and to remove all of his bonuses. On top of that, Activision Blizzard is waiving mandatory arbitration, which is something the workers' advocacy group had been asking for.

In a news release, Kotick acknowledged Activision Blizzard's shortcomings, saying, "The guardrails weren't in place everywhere to ensure that our values were being upheld."

"In some cases, people didn’t consistently feel comfortable reporting concerns, or their concerns weren't always addressed promptly or properly. People were deeply let down and, for that, I am truly sorry," he said. "Being welcoming and inclusive, in the context of our workplace, is crystal clear. We will still passionately debate ideas, employ healthy skepticism when appropriate, and demand excellence and rigor in all of our pursuits--but we will always treat each other with dignity and respect. And regardless of differences, voices will be heard, perspectives welcomed, and contributions valued."

Kotick said Activision Blizzard has "tripled" its investment in anti-harassment and anti-discrimination training, and it's made "meaningful organization changes." Kotick also said the company has "substantially increased resources for reporting and carefully investigating improper behavior."

Still, Kotick said Activision Blizzard has "a lot more to do if we are to be the company that others emulate."

There are five specific changes that Activision Blizzard is seeking to implement to improve its corporate culture. These include a new zero-tolerance harassment policy and a drive to increase the percentage of women and non-binary people in the workforce by 50% to amount to more than one third. (The figure today stands at around 23%). Additionally, Activision Blizzard is waiving mandatory arbitration in sexual harassment and discrimination claims--this decision was informed by feedback from employees, Kotick said. "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," Kotick said.

Kotick also promised that Activision Blizzard will "increase visibility on pay equity" by releasing new findings annually. For 2020 in the US, women at Activision Blizzard earned "slightly more" than men for comparable work, Kotick said. And fifth, Kotick pledged that Activision will "provide regular progress updates" so everyone can track how the company is doing against its goals.

The five changes are listed in full below, as written by Kotick.

1. We are launching a new zero-tolerance harassment policy company-wide – 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. In retrospect, to achieve our goals for workplace excellence, this approach is no longer adequate. We need tougher rules and consistent monitoring across the entire company to make sure reports are being handled correctly and discipline is appropriate and swift.
   As a result, we are implementing a zero-tolerance policy across Activision Blizzard that will be applied consistently. Our goal is to have the strictest harassment and non-retaliation policies of any employer, and we will continue to examine and tighten our standards to achieve this goal everywhere we do business.
   Any Activision Blizzard employee found through our new investigative processes and resources to have retaliated against anyone for making a compliance complaint will be terminated immediately.
   In many other instances of workplace misconduct, we will no longer rely on written warnings: termination will be the outcome, including in most cases of harassment based on any legally protected category.
   Future employment contracts and equity awards will be clear: termination for these reasons will result in the immediate forfeiture of future compensation.
   We also want to ensure that employees who file reports are encouraged, protected, and heard. For all reports of harassment and retaliation, we will investigate the allegation and whether the Activision Blizzard personnel who received the report of such behavior took the appropriate steps to protect the integrity of our compliance processes.
   There may be some places around the world where local law may restrict some of these measures. In those cases, we will apply the highest permissible standards and the strongest possible discipline.
2. We will increase the percentage of women and non-binary people in our workforce by 50% and will invest $250 million to accelerate opportunities for diverse talent –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. Each franchise team, business unit, and functional area will be expected to have plans to help fulfill this ambition.
   With respect to diversity, while we perform better than our peers with 30% of our U.S. workforce from diverse or under-represented communities, broadening this progress will continue to be a significant focus of mine as well as company, business unit, and franchise leadership.
   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 commitment includes inspiring diverse talent to pursue career opportunities in gaming through an ABK Academy that includes partnerships with colleges and technical schools serving under-represented communities, mentorships for participants, and a rotating apprenticeship program that leads to game development jobs, similar to the programs we began with the United Negro College Fund and Management Leadership for Tomorrow. We will also provide learning, development, and advanced degree opportunities for current employees to increase the number of women and those from under-represented communities in leadership positions across the company and in our industry.
   In the coming months, Brian Bulatao, Julie Hodges, and I will share details about how we are operationalizing these goals and implementing and measuring this expanded investment.
3. Based on feedback from employees, we are waiving required arbitration of sexual harassment and discrimination claims – 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 will continue to increase visibility on 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. In fact, our U.S. analysis showed that women at the company on average earned slightly more than men for comparable work in 2020. To ensure transparency on our continuing commitment to pay equity, we will report these results annually.
5. We will provide regular progress updates – 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. We also will be adding a dedicated focus on this vital work in our annual report to shareholders and in our annual ESG report with information on gender hiring, diversity hiring, and workplace progress.

Regarding Kotick's pay, he said he has asked the board of directors to cut his pay to $62,500, which is the lowest amount allowed by California law for people earning a salary. Kotick's bonuses are being cut, too. "To be clear, this is a reduction in my overall compensation, not just my salary. I am asking not to receive any bonuses or be granted any equity during this time," he said.

For comparison, Kotick made $154 million in total compensation in 2020.

Kotick said his pay will only return to what it was before if and when the company achieves its "transformational gender-related goals and other commitments" as determined by the Board.

"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. You have my commitment that we will do everything possible to honor our values and create the workplace every member of this team deserves," Kotick said.

"I am grateful for how much people care about this company, and I appreciate that many past and present employees have reached out with their thoughts, concerns, complaints, and suggestions. Your experiences, so courageously shared, serve as reason and reminder for why it is so important for us to do better. And we will."

For more, check out a timeline of the Activision Blizzard sexual harassment and discrimination case, which runs through all the key developments in the story.