Activision Blizzard Shareholder Criticizes Response to Lawsuit

Activist investment group SOC, a shareholder in Activision Blizzard, has criticized the company's response to a recent lawsuit describing its culture of sexual harassment and gender discrimination.

SOC's executive director Dieter Waizeneggar shared a letter with Axios Gaming saying the measures Activision Blizzard leadership has undertaken fall far short of what's required to fix the culture describe in the suit.

"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," Waizeneggar wrote.

SOC has previously criticized what it describes as the excessive compensation given to Activision Blizzard CEO Bobby Kotick in particular, and to the company's executives more generally. Waizeneggar reiterated that criticism in the context of the alleged enabling of a toxic culture at the company.

"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 Kotick articulated."

Kotick previously committed to an independent review of its policies and procedures regarding respectful and inclusive work conditions, to be conducted by law firm WilmerHale. Waizeneggar criticized the choice of WilmerHale.

"The announced review by WilmerHale 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."

When the California Department of Fair Employment and Housing lawsuit against Activision Blizzard was made public, the company's initial response described it as "irresponsible behavior from unaccountable state bureaucrats that are driving many of the State's businesses out of California," saying the allegations were "distorted, and in many cases false."

After an open letter condemning that response was signed by more than 2,600 current and former Activision Blizzard employees, plus scores of workers at Blizzard's Irvine, Calif. campus staging a walkout, Kotick was forced to apologize for that initial statement.

Activision Blizzard employees were unimpressed with his apology, saying he failed to address their demands for better work conditions. Those demands include the end of forced arbitration for all employees, worker participation in oversight of hiring and promotion policies, greater pay transparency, and employee selection of a third party to audit HR and other company processes.

SOC's letter adds pressure to C-suite to do more to address the problem. The investment group has made several specific suggestions to Activision Blizzard:

• "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."

Activision Blizzard has yet to comment.