Last April, something truly remarkable happened in corporate America. One of the most overpaid CEOs in the world took a 50% pay cut.
That would be Activision Blizzard CEO Bobby Kotick, who has long been criticized as one of the worst examples of executive pay running wild. His new contract slashed his pay from $1.75 million annually to just $875,000, and also removed several awards from his compensation package that would have been worth millions.
However, frequent Kotick critic CtW Investment Group recently issued a statement saying that the pay cut doesn’t go nearly far enough to bring Bobby’s pay down to a reasonable level.
First, CtW points to the length of the pay contract, which goes from April 2021 to March 2023–less than two years. After that, Kotick is free to renegotiate his compensation package back to pre-cut levels or possibly even higher.
“While the terms of the extension represent a pay reduction for Mr. Kotick, the extension is too short to significantly impact his total pay for an extended time,” wrote CtW executive director Dieter Waizenegger in a letter to Activision Blizzard shareholders. “Given the repeated opposition to CEO Kotic’s pay over the years, shareholders should expect to see a long-term reform of his compensation over a greater period than merely one year.”
The letter also notes that the current contract overlaps with the Shareholder Value Creation Incentives awards that are still available, meaning that while Kotick’s salary has been reduced in 2021 he’s likely to still make a ton of cash this year. The value of the same 2020 awards totaled nearly $124 million, according to CtW, which was many times greater than Kotick’s actual salary.
“Because the contract extension is only until the end of March 2023, the only full year for which Mr. Kotick will see a meaningful pay reduction is 2022,” Waizenegger added.
Besides urging shareholders to vote against Kotick’s new pay proposal at the annual shareholder meeting, the group also called on shareholders to elect a new chair of the Compensation Committee to come up with a new proposal that might “truly reign in Mr. Kotick’s continued outsized equity pay.”
