After heavy criticism over his massive pay package even as Activision Blizzard employees were being laid off, Bobby Kotick has signed a new extension agreement till 2023 with a 50% cut in salary and a reduction in bonus.
Activision Blizzard CEO, Bobby Kotick has agreed to halve his salary as well as reduce his bonus as part of his new employment contract. The Activision boss has extended his tenure with the company till 2023.
Effective January 1, 2021, Kotick has agreed to a reduction in his base salary from $1.75 million to $875,000. The CEO’s annual bonus also has a significantly lower cap as part of the extension agreement.
Activision CEO agrees to a pay cut
Bobby Kotick has been Activision’s CEO for over 30 years but recently has been in the news for the wrong reasons. Kotick faced heavy criticism for his inflated salary and huge bonus even as the company laid off hundreds of employees.
According to Activision Blizzard’s latest SEC filing of its employment extension agreement, the CEO will settle for a 50% cut. In addition, the Transformation Transaction Award and Shareholder Value Creation Incentive have also been eliminated, as spotted by Wowhead. The Shareholder Value Creation incentive itself was worth nearly $40 million after taxes, according to Wowhead.
The maximum annual bonus for each of the fiscal years 2021 and 2022 will be up to a maximum of 200% of his base salary. The Extension Amendment Act does not provide for any guaranteed annual base salary increases.
One of the longest-serving Fortune 500 founders and CEOs
Bobby Kotick has been at the helm of Activision Blizzard for over thirty years. He has been instrumental in the company’s success and growth over the years. Activision Blizzard’s SEC filing highlights the company’s rapid growth over the years. The company’s market capitalization has increased at a 26% compound annual growth, well above the S&P median growth of 9%. Activision Blizzard has also increased its market capitalization from less than $10 billion to more than $70 billion under his leadership, as per the SEC filing.
Despite the growth and profits, Activision Blizzard laid off more than 800 employees in 2019. It was a record profitable year for Activision Blizzard, which is why these layoffs came as a surprise to the industry. Bobby Kotick made $30 million in 2019 and even more in previous years as per Gamespot.
Activision Blizzard’s skewed approach to human capital management — lavishing multimillion-dollar rewards on the CEO as employees face layoffs — needs to be addressed before it manifests in deeper operational problems.CtW Investment Group, a pro-labor group.
Featured Image Credit: Getty Images via inc.com.