Activision Blizzard CEO Bobby Kotick will receive a $200 million USD cash payout due to what that CtW Investment Group referred to as a "loophole" in his contract. The news comes only a day after Activision Blizzard announced began laying off between 50 and 190 workers, which is in addition to the nearly 800 workers that were laid off in 2019.
In the report published by Kotaku on Wednesday, the CtW Investment Group, a corporate watchdog and union pension advocacy organization, explained that the massive $200 million USD cash payout is based on the "Shareholder Value Creation Incentive" provision in Kotick's employment contract. This provision is designed to pay him a bonus based on the performance of the stock value, regardless of the influence of his decisions on the boost in value.
According to CtW, the provision as written allows Kotick to retroactively claim performance bonuses from previous years based on this year's performance, even if targets in those previous years were missed. This loophole allowed Kottick to claim performance bonuses from the past four years, leading to the $200 million USD cash payout.
The size of the bonus is based on Activision Blizzard's quickly climbing stock value. Since Kottick was hired in 2016, the stock has grown from around $32 USD a share all the way up to over $100 a share last month. Since the stock remained at over double the value of when Kottick was hired in 2016 for at least 90 days, the Shareholder Value Creation Incentive provision activated earlier this month, according to Activision Blizzard's SEC filing.
"While the increase in Activision's stock price is somewhat commendable, as we stated last year and continue to assert, this achievement alone does not justify such a substantial pay outcome for the CEO," said Michael Varner director of executive compensation research at the CtW Investment Group.
He continued: "There are many factors that may contribute to a rise in this particular company's stock price that may not be directly attributable to Robert Kotick's leadership. The use of video games as one of the few entertainment options available amid the COVID-19 pandemic, for example, has been a boon to many companies in the gaming industry irrespective of executive talent or strategic decisions."
Many people online were quick to point out that it's a bad look for Activision Blizzard to lay off dozens of employees while paying out their CEO one-fifth of a billion dollars.
Inven Global reached out to Activision Blizzard for comment on this story but has not received an official response as of publishing this article.
Aaron is an esports reporter with a background in media, technology, and communication education.