Activision Blizzard 2020

Activision Blizzard 2020

Activision Blizzard 2020 (ATVI) annual meeting is 6/11/2020 at 9AM Pacific virtually. (which looks very difficult, since my web browsers tell me going there involves security risk). Vote online by 6/10. To enhance long-term value: Vote AGAINST Bowers, Corti, Kelly, Kotick and Morgado, Auditor, Pay. Vote FOR Political Disclosure.  See list of all virtual-only meetings maintained by ISS.

Activision Blizzard, Inc., together with its subsidiaries, develops and distributes content and services on video game consoles, personal computers (PC), and mobile devices in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Reading through more than 100 pages of the proxy takes too much time for most. Your vote could be crucial. Below, how I voted and why.

If you have read these posts related to my portfolio and proxy proposals for the last 24 years and trust my judgment, skip the 9 minute read. See how I voted in my ballot. Voting will take you only a minute or two. Every vote counts.

I voted with the Board’s recommendations 46% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). 

Read Warnings below. What follows are my recommendations on how to vote the proxy in order to enhance corporate governance and long-term value.

Activision Blizzard 2020: ISS Ratings

From the Yahoo Finance profile: Activision Blizzard, Inc.’s ISS Governance QualityScore as of December 6, 2019 is 6. The pillar scores are Audit: 1; Board: 6; Shareholder Rights: 1; Compensation: 10. Corporate governance scores courtesy of Institutional Shareholder Services (ISS). Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk. We need to pay close attention to the board and compensation.

Activision Blizzard 2020 Proxy Voting Guide: Board Proposals

1. Activision Blizzard 2020 DirectorsEgan-Jones

Egan-Jones Proxy Services recommends Against 1A) Reveta Bowers, 1B) Robert Corti, 1D Brian Kelly, and 1G) Robert Morgado. Corti and Morgado have served for 10 years or more, so should no longer be considered independent nor should they serve on compensation, audit or nominating committees. Bowers and Morgado should be held responsible with regard to poor judement in recommended compensation plan.

Mr. Kotick should be held liable for poor cybersecurity, plus his pay have been outrageous for years.

Vote: 1A) Reveta Bowers, 1B) Robert Corti, 1D) Brian Kelly, 1E) Robert Kotick and 1G) Robert Morgado.

2. Ratification of Independent Auditor

I have no reason to believe the auditor engaged in poor accounting practices or has a conflict of interest. Egan-Jones recommends voting against the auditor if they served for seven years. Independence becomes compromised by that time. PricewaterhouseCoopers, LLP has served more than seven years. No other issues appear significant.


3. Executive Compensation


Activision Blizzard Summary Compensation Table shows the highest paid named executive officer (NEO) was CEO Robert Kotick at over $30M. I’m using Yahoo! Finance to determine market cap ($53.5B) and I define large-cap as $10B, mid-cap as $2-10B, and small-cap as less than $2B. Activision Blizzard  is a large-cap company

According to MyLogIQ , the median CEO compensation at large-cap corporations was $12.2M in 2019. Activision Blizzard shares underperformed during the last two year time period but outperformed during the last one and five year time periods. The ratio of the annual total compensation of the CEO to the median of the annual total compensation of all employees was 319:1

Egan-Jones Proxy Services writes Against:

We believe that shareholders cannot support the current compensation policies put in place by the Company’s directors. Furthermore, we believe that the Company’s compensation policies and procedures are not effective or strongly aligned with the long-term interest of its shareholders.

An exempt solicitation from CtW Investment Group goes into more detail regarding the excessive pay to CEO Robert Kotick. For example, over the past four years, Kotick has received $96.5 in combined stock/option awards alone.

Given far above median pay, mixed performance, E-J and CtW recommendations, and my general concerns about inequality, I voted AGAINST.


Activision Blizzard 2020 Shareholder Proposals

4. Political Disclosure

This proposal from me (James McRitchie) requests Activision Blizzard provide a semiannual report disclosing policies and procedures, as well as expenditures, both direct and indirect. E-J recommends Against.

Disclosure is in the best interest of the Company and its shareholders. The Supreme Court recognized and assumed this in its 2010 Citizens United decision, when Judge Kennedy wrote,

[D]isclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.

Relying on publicly available data does not provide a complete picture of the Company’s electoral spending. This proposal asks the Company to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organizations, currently hidden, which may be used for electoral purposes.

This would bring our Company in line with a growing number of leading companies, including Alexion Pharmaceuticals Inc., Celgene Corporation, and Biogen Inc., which present this information on their websites.

Proxy InsightAccording to Proxy Insight, Proposals on this topic at Alliant Energy and Cognizant Technology Solutions passed last year, despite board opposition. This year, shareholders of Centene Corporation, J.B. Hunt Transport Services, and Western Union have also passed similar proposals.

Vote: FOR

Activision Blizzard 2020 CorpGov Recommendations

Looking up a few funds announcing votes in advance, NYC Pensions voted For all items except Pay. Trillium voted Against Meyer, Morgado, Wasserman and Pay. 

CorpGov Votes:

  1. Directors: AGAINST 1A) Reveta Bowers, 1B) Robert Corti, 1D Brian Kelly, and 1G) Robert Morgado.
  2. Auditor: AGAINST
  3. Executive Pay: AGAINST
  4. Political Disclosure: FOR

Activision Blizzard: Mark Your Calendar

Any stockholder may present a proposal for inclusion in our proxy statement for, and for consideration at, the 2021 annual meeting of our stockholders by submitting his or her proposal to us in writing, in a timely manner. The stockholder must also be a stockholder of record of Activision Blizzard at the time of notice is given. For such notice to be considered timely, we must receive it on or before December 25, 2020 (unless the date of our 2021 annual meeting is advanced by more than 30 days or delayed by more than 30 days from the anniversary date of the Annual Meeting, in which case the proposal must be received a reasonable time before we begin to print and mail our proxy materials for our 2021 annual meeting). For such proposal to be included in our proxy statement, it must otherwise be in compliance with Rule 14a-8 under the Exchange Act.


Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime). I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” chosen by aspiration. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world. The rationale for peer group benchmarking is a mythological market for CEOs. For more on the subject, see CEO Pay Machine Destroying America.


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