Two Activision Blizzard shareholders have now filed lawsuits against the company for alleged inadequate disclosures and conflicts of interest in its filings to the Securities Exchange Commission regarding its upcoming sale to Microsoft. The $68.7 billion sale, which ranks as the biggest gaming acquisition ever, was first announced on Jan. 18.
Polygon first reported on Feb. 24 that just one shareholder, Kyle Watson, was suing the company in California, alleging that the Microsoft sale was “unfair” and “not in the best interest” of the company or its shareholders. On Feb. 25 another shareholder, Shiva Stein, filed her own lawsuit in a New York court for similar reasons.
Watson’s lawsuit alleges potential conflict of interest, stating that the Activision Blizzard board members and executive officers have “secured unique benefits for themselves” that are not available to shareholders. It also mentions the “golden parachute” packages available to certain executives including Bobby Kotick. The “golden parachute” packages are the severance packages that would be afforded to these executives should they be terminated from the company. According to a report from Axios, Kotick would receive $15 million if he were to be terminated.
Activision Blizzard’s SEC filing, which Watson’s lawsuit calls “materially misleading,” reveals more information about the deal and its timeline. Notably, it shows that the talks between Microsoft and Activision Blizzard began just three days after a report from the Wall Street Journal exposed Kotick’s knowledge of and involvement in the workplace misconduct that has plagued the company for years.
On Nov. 18 2021, in response to the allegations against Kotick, Head of Xbox Phil Spencer wrote in an email to staff that he would be making “ongoing proactive adjustments” to the company’s relationship with Activision Blizzard. The very next day while on a call with Kotick, Spencer “raised that Microsoft was interested in discussing strategic opportunities between Activision Blizzard and Microsoft.”
The new shareholder lawsuits are just the latest in a series of legal troubles that Activision Blizzard has been contending with for the past eight months. The California Department of Fair Employment and Housing sued the company in July 2021 for gender discrimination and workplace misconduct. Since then, Activision Blizzard has continued to be embroiled in controversy as more reports of harassment and discrimination surface. The company has also been accused of union-busting, particularly when it comes to Raven Software, whose employees recently formed the first big-budget games industry union in North America.
Published: Feb 26, 2022 04:25 pm