Investors want Activision's CEO out

2 years ago

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December 10, 2021

Good morning, Broadsheet readers! Letitia James is out of New York governor’s race, women scientists blow the whistle on harassment, and Activision’s CEO still has his job—and his outside board seat. Have a festive weekend.
– Saving his seat? Back in November, we wrote about a bombshell report from the Wall Street Journal that Bobby Kotick, CEO of Activision Blizzard, had allegedly known for years about accusations of misconduct at his company. The charges, as you might remember, were serious: they included claims that a woman was repeatedly raped by her male supervisor while HR ignored her attempts to report the situation, and a different woman who killed herself after sensitive photos of her were allegedly shared at a company party. What’s more, the WSJ reporting found that Kotick had actively withheld this information from the company’s board. (A company spokesperson told the Journal the CEO “would not have been informed of every report of misconduct at every Activision Blizzard company, nor would he reasonably be expected to have been updated on all personnel issues,” and the paper says, “Kotick described himself as transparent with the board” in a recent interview.) If you can tolerate more on this grim story, read the full WSJ report here and our Broadsheet coverage of the situation here.
Today, almost a month later, Kotick still has his job. What’s more, he has also retained his only outside board seat, on the Coca-Cola board of directors. Now, the SOC Investment Group, an investment group that works with union pension funds and reportedly manages more than $250 billion in assets, is demanding that Coca-Cola remove Kotick from its board. (The group has also called for him to step down as CEO of Activision; SOC says it owns about 3 million shares in each company.)
SOC says it’s focusing on Coca-Cola because the company has made repeated public pledges to support diversity and inclusion, as well as social justice. The investment group is asking that the beverage giant not renominate Kotick to the board next year. Coca-Cola hasn’t commented, but SOC says that if the company keeps Kotick, it will oppose not just the Activision CEO, but all other directors as well.
A little light digging reveals that one of Kotick’s committee assignments on the Coca-Cola board is “directors and governance,” which is rather ironic, given the allegations that Kotick has a longstanding practice of hiding things from his own directors. Board seats are a source of influence and compensation for executives. Over the course of his service on the board, Coca-Cola has paid him a total of $2.3 million dollars, according to S&P Global—which is, to be fair, chump change for someone whose 2020 CEO pay package was valued at $154 million. Meanwhile, corporate boards remain, as a whole, overwhelmingly white and male, in part because executives of that description settle into those seats and never seem to leave. (Kotick has been on the Coca-Cola board since 2012.)
How will Coca-Cola react? Companies rarely take kindly to being told who they can or can’t put on their boards, but it’s hard to see how this doesn’t become a PR hassle for the beverage giant. There may well be customers, employees, or even other board members (the Coca-Cola board is studded with well-known business people, including Banco Santander’s Ana Botín and IAC/InterActiveCorp’s Barry Diller) who don’t take kindly to Kotick’s continued involvement. Perhaps SOC’s decision to issue a public ultimatum will prompt others to do the same.
Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee
The Broadsheet, Fortune’s newsletter for and about the world’s most powerful women, is coauthored by Kristen Bellstrom, Emma Hinchliffe, and Claire Zillman. Today’s edition was curated by Emma Hinchliffe.

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