Bobby Kotick will remain chief executive of Activision Blizzard while Microsoft closes its deal to acquire the embattled publisher of Call of Duty, World of Warcraft, and Overwatch. When the $68.7 billion deal is finalized in 2023, “the Activision Blizzard business” will report to Microsoft Gaming CEO Phil Spencer, Microsoft said.
But it remains unclear what Kotick’s position at Activision Blizzard, if he still has one, will be after the proposed buyout is completed. The companies say only that Kotick will remain CEO through Microsoft’s 2023 fiscal year, which ends June 30, 2023. Kotick told The New York Times that he “will be available as needed” after the closing.
A new Wall Street Journal report Tuesday, citing sources familiar with the deal, says that the companies have agreed that Kotick will leave “once the deal closes.” If he’s no longer with Activision afterward, his employment contract calls for him to receive a severance package worth nearly $293 million should he lose his job to a corporate takeover, according to financial documents. Reached for comment, a Microsoft representative told Polygon that, “given the extended close time,” the company has nothing more to add, instead pointing to Spencer’s initial statement announcing the deal.
What we know for sure is that for Kotick will remain Activision Blizzard’s CEO until the Microsoft deal is signed — something that could take more than a year to do. “This is going to get a lot of regulatory scrutiny,” LightShed Ventures analyst and partner Brandon Ross told Polygon. It will need to be evaluated in the United States, but also in Europe, Ross said, where merger and acquisition standards are high. For instance, U.K. regulators are trying to block the $400 million acquisition of GIF search engine Giphy by Meta (the company formerly named Facebook).
Microsoft’s proposed acquisition also comes as Activision Blizzard reckons with allegations of a toxic, sexist, and discriminatory workplace, which has spawned multiple lawsuits and federal investigations. Kotick is more than just a symbol of Activision Blizzard’s troubled workplace; another Wall Street Journal report just this Monday said Kotick had been hiding the scale of Activision Blizzard’s problems from the public — specifically, that 37 people have left the company and 44 more had been disciplined in actions related to its culture problems.
“In that closing period, somebody has to run the company,” Ross said. Kotick will retain power but will be in constant communication with Microsoft, Ross said. “Microsoft is going to assume the deal gets done and wants to drive towards the most seamless integration with their organization at the end, and make sure it doesn’t stray too far afield from the ultimate needs of the combined business.”
He continued: “There’s an obvious check and balance.”
In November, Spencer told Microsoft staff he was “disturbed and deeply troubled by the horrific events and actions” at Activision Blizzard, and that Microsoft was “evaluating all aspects” of its relationship with Activision Blizzard to make “ongoing proactive adjustments.” Now, Microsoft is publicly presenting a different position: In an investor call Tuesday morning, Microsoft chairman and CEO Satya Nadella praised Kotick for “his leadership and commitment to real culture change.”
“This is hard work,” Nadella said in prepared remarks. “It requires consistency, commitment and leadership that not only talks the talk, but walks the walk. That’s why we believe it’s critical for Activision Blizzard to drive forward on its renewed cultural commitments. We are supportive of the goal and the work Activision Blizzard is doing, and we also recognize that after close, we will have significant work to do in order to continue to build a culture where everyone can do their best work.”
Thousands of Activision Blizzard employees are not as confident that much will change. Late last year, Activision Blizzard workers called for Kotick’s resignation following an earlier Wall Street Journal report that he knew of serious workplace problems — including allegations of rape — and either concealed them from Activision’s board of directors or minimized their importance.
“Something’s got to change,” an Activision Blizzard employee told Polygon in November. “You can shift people around as you want, but if accountability isn’t coming from the top, it’s not going to change.”
Spencer on Tuesday did not reference Activision Blizzard’s culture problems directly, nor did he address what he called “horrific events and actions” back in November. In a blog post published alongside the acquisition news, Spencer said Microsoft is “looking forward to extending our culture of proactive inclusion to the great teams across Activision Blizzard.”
Kotick has led Activision since 1991 when he and a consortium of investors bought the company, whose origins date to the Atari VCS console. In 2008 he orchestrated the merger between Activision and Vivendi, which also brought Blizzard Entertainment under the Activision umbrella and formed a new company, Activision Blizzard, with Kotick as its chief executive.
Kotick’s contract was renewed in 2021, keeping him aboard as CEO for another year, albeit with a reduced salary of $875,000 per year, down from $1.7 million. (However, also in 2021, Kotick received $150 million in stock for a total of $154.6 million in compensation.) In October, Kotick slashed his salary and overall compensation to $62,500 “to ensure that every available resource is being used in the service of becoming the industry leader in workplace excellence,” he said.
Activision Blizzard’s board of directors have stood behind Kotick since its workplace crisis became mainstream news over the summer of 2021. It has since created a “Workplace Responsibility Committee” to respond to the ongoing workplace sexual harassment and discrimination crisis.
Source: Polygon
