Activision Blizzard’s Bobby Kotick is officially sued by New York City officials for his misconduct.
A lawsuit from New York City officials accuses Activision Blizzard CEO Bobby Kotick of hastily selling the company to Microsoft in order to avoid liability for misconduct and receive substantial bonuses. As reported by Axios, the lawsuit was filed April 26 by the New York City Employees’ Retirement System and the city’s fire, police and teacher retirement funds.
The plaintiffs, which own shares of Activision Blizzard, have filed a lawsuit to gain access to the company’s books and records, which they believe could expose Kotick and the company’s board of directors to actions wrongdoing because they themselves have reduced the company’s stock price. They initially began seeking access to Activision Blizzard’s internal documents last October after the Call of Duty and World of Warcraft publishers were sued by the California Department of Employment and Housing (DFEH) for does not deal with sexual harassment and discrimination against female employees in the company.
The plaintiffs are seeking to determine what Kotick knew about sexual misconduct at Activision Blizzard as a pretext to sue him and other board members for allegedly undermining the company. Since then, Microsoft has begun negotiating with Kotick about a deal to buy Activision Blizzard just three days after publishing a Wall Street Journal report alleging that the company’s leadership had known for years about the allegations. forced sexual misconduct.
In a statement at the time, a company spokesperson said Kotick “would not be notified of any reports of misconduct at any Activision Blizzard company, nor would it be lawfully expected reason that he will be kept up to date on all personnel matters.”
The lawsuit alleges: “Given Kotick’s personal and legal liability for Activision’s damaged workplace, the Board of Directors should have made it clear that he was unfit to negotiate the resale of the company. company, but the situation may not be like that”. Instead, the board is said to have let Kotick lead the negotiations on behalf of the company while the company took the back seat. “Microsoft opened acquisition discussions on November 19, 2021, but the Board of Directors did not hold a meeting to discuss Microsoft’s accessibility until two weeks later, on January 1. 12, 2021″ the lawsuit claims.
“Within that period, without Board authorization or an actual offer from Microsoft, Kotick bluntly informed Microsoft that he would be willing to accept an offer in approximately 90 minutes. $ – 105$ per share”. In January, it was announced that Microsoft had agreed to acquire Activision Blizzard in a deal priced at $95 per share, in an all-cash transaction valued at $68.7 billion.
“The speed with which Kotick is moving not only to the setting of the offer, but also to the execution of a deal, is to be expected,” the lawsuit alleges. “The merger not only provides Kotick and his fellow directors with a means of escaping liability for a material breach of their fiduciary duty, but it also gives Kotick the opportunity to receive significant benefits. “As detailed in the benefits code, these include substantial bonuses that Kotick can receive.” The lawsuit found that the merger price “appears to severely underestimate Activision as it is only 1% higher” than the company’s stock price before it was sued by the DFEH in July 2021.
“With the merger announced, Kotick will be able to escape liability and accountability entirely, and will instead continue in an executive role after this merger is closed. Worse still, despite his liability for breach of fiduciary duty, the Board of Directors authorized Kotick to negotiate the transaction with Microsoft on its own. The decision of the Board of Directors to assign Kotick to carry out the negotiation process is indefensible because of Kotick’s unreasonable additions.” Activision Blizzard recently recommended that its shareholders vote against a proposal that they prepare an annual public report on the company’s efforts to prevent harassment and discrimination. .