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Activision Blizzard faces a contested vote over that of its chief executive $ 155 million payment package on Monday after delaying the confrontation in what critics say was an effort to avoid a shameful reprimand.
The video game company postponed the non-binding “say on payment” vote after the regularly scheduled annual meeting on June 14, delaying shareholders ’verdict on Bobby Kotick’s salary by a week. CEO Glass Lewis said he knew no precedent for the move.
Activision said it wanted to counter “misleading” statements about its pay practices and highlighted the changes it had already made to Kotick’s pay in response to shareholder comments. The company declined to comment, but its decision has baffled analysts and infuriated investors.
“If we talk seriously about the shareholder voting franchise, the desire for a different outcome cannot drive decisions about whether they are postponed,” said Glenn Davis, deputy director of the Institutional Investors Board, which represents pension funds.
“I don’t see a good reason to do that,” said Neil Macker, a Morningstar analyst who covers Activision. While rare, large companies occasionally don’t pay votes, “and people keep going,” he said. Delaying the vote, “all it does is draw attention to it,” he argued.
Investors typically approve executive compensation plans with at least 90% support, but Activision was at risk of losing this year’s vote. Only 56.8 percent of its shareholders supported its remuneration for 2019, and CEOs Institutional Shareholder Services and Glass Lewis recommended investors vote against their 2020 pay.
Most of Kotick’s $ 155 million package was awarded in prizes related to the 2016 goal of doubling its market capitalization. Activision’s shares surpassed that target after jumping 58% in 2020 as encouraged consumers headed to their popular franchises, from World of Warcraft to Crash Bandicoot. The strong performance of the shares tends to calm investors annoyed by the oversized remuneration of executives, but Kotick’s large rewards raised concerns.
While Activision made substantial changes to address the CEO’s salary concerns, its total salary is 2.55 times the average of the company’s colleagues, the ISS said. It was also 1,560 times that of the average employee of Activision, compared to a ratio of 319: 1 in 2019.
An adjournment of the meeting may be appropriate in some cases, such as when a late development alters the facts in a contest of representatives or in a proposal for mergers and acquisitions, said Davis of IIC, who added that “Activision is not a of these cases “.
A vote delay seems to be “a sign of despair” and a last-ditch effort to arm investors to side with the company over the loss of Kotick, a director who was not connected to Activision said.
Governance experts said adjournments of votes on other issues were also rare, but noted a 2000 case in which the Wisconsin investment board sued Peerless Systems after the technology company stopped voting on a plan to stock options. This gave him extra time to ask for enough support for the motion to pass.
The parties agreed, but not before the Delaware Chancery Court had ruled that “adjournments specifically intended to interfere with the results of a valid shareholder vote will result in deep judicial suspicion” and stated that councils should have a “strong justification” for such delays.
Following last year’s narrow pay vote, Activision doubled its disclosure to institutional investors on executive compensation. “But frustratingly and ironically, because of the extraordinary performance of the company’s shares, equity premiums seem high,” said Betty Huber, a Davis Polk lawyer.
While the payoff vote is not binding, Activision appeared to urge investors to focus on the salary changes the company made and its strong performance in the shares, he said.
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