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Although the letter begins with an acknowledgement of CEO Bobby Kotick’s message to employees, in which he called Fran Townsend’s email tone deaf, the SOC Investment Group is still critical of his response, stating that it does not go far enough to address the “deep and widespread issues with equity, inclusion, and human capital management at the company.” The letter does not reference the CEO’s statement during the recent financial results conference call, in which he took a strong stance against discrimination and called for Activision Blizzard to set an industry-wide example, though that statement was similarly strong on promises and light on details. Within the investment group’s letter are three chief complaints, along with three petitions:
SOC Investment Group
- No changes have been announced or proposed that would in any way alter the current process for filling vacancies either to the board of directors or to senior management.
- No changes have been announced with respect to executive pay, either with respect to clawing back compensation from executives who are found to have engaged in or enabled abusive practices, or to align executives with the equity goals Mr. Kotick articulated.
- The announced review by Wilmer Hale is deficient in a number of ways: this firm has a sterling reputation as a defender of the wealthy and connected, but it has no track record of uncovering wrongdoing, the lead investigator does not have in-depth experience investigating workplace harassment and abuse, and the scope of the investigation fails to address the full range of equity issues Mr. Kotick acknowledges.
We believe that to ensure smooth operations and a strong reputation going forward, Activision Blizzard should commit to the following changes:
- Increase board diversity and equity by adding a woman director – preferably one with a history of advocacy for marginalized people and communities – by the end of 2021, committing to gender-balance on the board by 2025, and reserving at least one board seat for a nominee selected by current employees as their representative.
- Claw back bonuses from executives found to have engaged in or enabled abusive behavior, award no bonuses for 2021, and make future bonus awards contingent on the company as a whole achieving clearly articulated and independently verified milestones for diversity and equity.
- Undertake a company-wide Equity Review, similar to the Racial Equity Reviews that Facebook, Air B&B, Starbucks, and BlackRock have completed or promised, but that will encompass the full range of concerns (including inequities rooted in gender, gender-identity, sexuality, and race) articulated by Mr. Kotick, Activision Blizzard employees, and customers: equity and representation issues in game design, the development process, and in user forums and similar settings.
Rather than the CEO, this letter is addressed to Robert Morgado, the Lead Independent Director of Activision Blizzard and a member of the board since February 1997. The lead independent director’s role is to act as a mediator to facilitate the resolution of any disputes involving the board chair, making them an important point of contact for principle shareholders to raise issues and concerns, particularly when the board chair, CEO, or other executive directors are either complicate in or have failed to resolve a situation. Like most of these proposals, it is very unlikely that all of these demands will be enacted directly, but they bring attention to the complaints, and helps pressure the corporation to come up with their own solution – often meeting somewhere in the middle, such as Activision Blizzard resisting the AFL-CIO’s proposal to institute a Rooney Rule being rejected, but resulting in Kotick issuing a directive to require all hiring managers ensure they have diverse candidate for all open positions.
The relationship between the Lead Independent Director and other corporate entities, courtesy of Harvard Law.
Formerly known as the CtW Investment Group, the SoC Investment Group is a union pension fund advisory organization whose mission statement states that it “holds corporations and their leadership accountable for irresponsible and unethical corporate behavior and excessive executive pay” and “supports regulatory and shareholder initiatives to ensure independent and accountable directors, reasonable executive compensation practices, and sound environmental, human capital and other business policies.” As an Activision Blizzard shareholder, the group previously slammed Bobby Kotick’s incentive based pay, shortly before he cut his salary by 50% earlier this year, and levied similar complaints against Electronic Arts executive pay.