Activision Blizzard CEO urged to step down amid allegations he ignored sexual misconduct
Pressure is mounting on Activision Blizzard CEO Bobby Kotick to step down, with some employees at the video game giant and activist shareholders calling for his resignation following a report that he withheld information about alleged sexual misconduct at the company.
The push for Kotick's removal comes a day after the Wall Street Journal published an article claiming he had been aware of alleged incidents — including reports of rape — involving Activision employees but did not disclose them to the company's board of directors or to shareholders.
Such reports led California officials in July to sue Activision, with the agency accusing the company of creating a "frat boy" workplace culture that allegedly subjected women to groping and unwanted advances.
A group of investors is pushing for Kotick's ouster. In a letter on Wednesday, the shareholders said that Kotick, 58, must step down and urging the board to start searching for a replacement "immediately."
"Our company faces an unprecedented workplace crisis of its own making," the shareholder group wrote. "As new reporting indicates, and in contrast to past company statements, CEO Bobby Kotick was aware of many incidents of sexual harassment, sexual assault and gender discrimination at Activision Blizzard, but failed either to ensure that the executives and managers responsible were terminated, or to recognize and address the systemic nature of the company's hostile workplace culture."
Activision Blizzard called the Journal article misleading in a statement released on Tuesday, adding that company is implementing changes that will make it the "most welcoming and inclusive workplace" in the gaming industry.
"Which is why, at Mr. Kotick's direction, we have made significant improvements, including a zero-tolerance policy for inappropriate conduct," Activision Blizzard said.
Employees stage protest
Such assurances may not appease at least some workers at the company. A group of employees — calling themselves A Better Activision Blizzard King — are also pushing for Kotick's resignation. They staged a walkout in California this week demanding that senior-level executives hear their demands.
"Under Bobby Kotick's leadership the company has been accused of mistreatment, sexual harassment, rape, and a death threat made by Kotick himself," the employees tweeted on Tuesday after the Journal story appeared. "The board is just as complicit if they let this slide. It's past time for Bobby to step down."
The controversy surrounding Activision started in July when the California Department of Fair Employment and Housing said that a two-year investigation by the agency had found evidence that company leaders had ignored sexual harassment cases. The agency, also known as DFEH, also file a lawsuit against Activision, which is headquartered in Santa Monica.
Since then, the U.S. Equal Employment Opportunity Commission also filed suit, which Activision settled in July after agreeing to create an $18 million fund to compensate workers who were harassed or discriminated against. The Securities and Exchange Commission has also opened a probe into how the company handled and disclosed sexual harassment complaints.
For now, Activision's board still appears to support him, saying in a statement on Tuesday that under Kotick's leadership "the company is already implementing industry leading changes including a zero tolerance harassment policy."
Several high-level executives and game designers have resigned or been forced out since the sexual harassment lawsuits surfaced, including the former president of the Blizzard division, J. Allen Brack, who resigned in August. Others to exit in August and September include a top HR executive and the company's chief legal officer.
Activision said in October that it fired 20 employees, mostly game developers, after investigating sexual harassment claims made by co-workers.
Earlier this month, however, Brack's replacement, Jean Oneal also resigned. Oneal told the company's legal team in a letter that she was leaving because she was being paid less than her male counterpart and because she has been "tokenized, marginalized and discriminated against," the Journal reported.
Kotick retains "institutional backing"
Activision is known for creating the popular video games Call of Duty and World of Warcraft. The company began as two separate entities — Activision and Blizzard — that joined forces during a 2008 merger with now-defunct Vivendi Games, the former parent company of Blizzard. The company has about 9,500 employees worldwide, 20% of which are women.
The shareholders pushing for Kotick's departure collectively own 4.8 million shares in the company, giving them a small stake in Activision. The company's two largest shareholders are Vanguard Group and BlackRock. Both declined to comment on the allegations against Kotick or on his status at the company.
Activision's stock price fell nearly 3% in trading Wednesday and have declined 13% this years.
"Kotick has institutional backing but faces an uphill battle in the court of public opinion," equity analysts with Raymond James wrote in a note. "Perceptions of Mr. Kotick are generally positive in the investor community given the remarkable growth Activision Blizzard has experienced under his watch and he maintains clear internal support."