Activision CEO Bobby Kotick takes pay cut ahead of earnings report

Activision’s top executive wants to make it obvious that he is taking measures to address the publisher’s problems. In a letter to employees, Kotick identified those issues as the company’s ongoing battle against its own toxic workplace culture. But these steps also come at a time when Activision has few potential hit games in its pipeline. The publisher plans to report earnings next week, and Kotick may find himself having to explain why growth is slowing even as the company remained a hostile place to work for many people.

In a belated response, Kotick is promising concrete changes. These include new policies at Activision that include a zero-tolerance stance on harassment as well as the elimination of forced arbitration. Additionally, Kotick has asked the board of directors to slash his own compensation to $62,500 — that includes a cut to his bonuses and equity.

Kotick reportedly earned nearly $200 million in a single bonus earlier this year in compliance with his compensation agreement.

“Over the last decade, as we’ve brought in new companies, grown our workforce, and expanded our business, we believed we had the systems, policies, and people in place to ensure that our company always lived up to its reputation as a great place to work,” writes Kotick. “Clearly, in some vitally important aspects, we didn’t.”

Activision Blizzard is facing multiple accusations and lawsuits regarding its work environment. The California Department of Fair Employment and Housing, in particular, is investigating the company for discrimination, systemic sexual misconduct, and other potential civil rights violations.

While those legal threats come from the outside, employees have also attempted to force change from within. And now, Activision is finally giving in on some of those points.

5 changes Activision is making to improve workplace equality

In his letter, Kotick shared a lengthy explanation of five changes that he is implementing to improve Activision as a workplace. Here is how they break down in plain language:

1. Activision will terminate most employees who it finds are responsible for harassing or retaliatory behavior.  This is part of its new zero-tolerance policy, which aims to eliminate verbal warnings.
2. The publisher is investing $250 million to increase its percentage of women and non-binary workers to 50%.
3. Activision will permit employees to opt out of arbitration. This practice forced employees to settle potential legal matters outside of the traditional justice and civil systems.
4. Activision will increase transparency on pay.
5. All teams within the company will provide quarterly progress reports on efforts to increase diversity and eliminate workplace toxicity.

Kotick goes on to claim that he will share specifics on how Activision plans to accomplish those goals.

Why now?

While Activision employees are sure to welcome moves like the end to forced arbitration, it’s worth scrutinizing the timing of this letter. Kotick and Activision have a lot of motivations to present the appearance of action. The aforementioned civil suits are certainly key, but so is Activision’s health as a publisher.

While Activision’s stock price is up from its 1-year low of $72.81 in September, it is still hovering near that range with a current price of around $79. And the problem for Kotick is that the company doesn’t have any obvious paths forward for growth.

Activision, Blizzard, and King all make a lot of money, but those companies likely peaked in 2020 as more people turned to gaming during the height of the stay-at-home pandemic response. And the company’s future slate seems like it may struggle against those comparisons.

Most notably, buzz around the upcoming Call of Duty: Vanguard is quiet. That game is launching next week, and it will likely end the year as the top-selling game. But it’s also possible that its sales could shrink compared to Call of Duty: Black Ops – Cold War and the prior year’s Call of Duty: Modern Warfare.

Fans of Call of Duty may still harbor excitement for Vanguard, but the game faces increased competition. Battlefield 2042 launches two weeks later, and Halo Infinite is launching in early December. And again, Call of Duty will likely outsell those games, but EA’s and Microsoft’s shooters could put a dent in Vanguard’s performance.

Beyond that, Activision Blizzard’s release calendar is looking bleak. It just released Diablo II: Resurrected to strong sales, but the timing of the next Blizzard hit is unknown. Diablo Immortal should hit mobile phones some time in 2022, but Overwatch 2 and Diablo IV still seem missing in action.

Investors could lay responsibility for this uncertainty at Kotick’s feet. He made the decisions to pull Activision studios off of other projects to instead support Call of Duty. That has led to successes like reliable, live-service earners in Call of Duty Mobile and Warzone. But it has also led to a dearth of other games on its release calendar.

So when Activision reports its earnings next week, investors will keep a close eye on Kotick’s forecast. And if that looks grim, well — hey, he already took a pay cut.

Originally appeared on: TheSpuzz