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Activision will face a $ 155 million sale after it avoids voting

Activision Blizzard has a controversial vote about its chief executive $ 155 million payment package on Monday, after an effort to avoid embarrassing reprimand for what critics say.

The video game company suspended the “say in return” vote after its annual meeting on June 14, delaying the shareholders ’verdict on Bobby Kotick’s salary. Representative Glass Lewis’s adviser said he did not know any precedent for such a move.

Activision has said it wants to address “misleading” statements about its payment practices and highlighted changes it has already made to Kotick’s payments in response to shareholder feedback. The company declined to comment further, but its decision has confused analysts and angered investors.

“If we’re serious about the shareholder voting franchise, the desire to get another result can’t decide whether or not to suspend the decision,” said Glenn Davis, deputy director of the Institutional Investors Board, which represents pension funds.

“I don’t see any good reason to do that,” said Neil Macker, a Morningstar analyst who studies with Activision. Strange as it may be, big companies occasionally don’t pay for votes, “and people move forward,” he said. Delaying the vote, “all it does is attract attention,” he argued.

Typically, investors support plans to pay executives with at least 90 percent support, but Activision was at risk of losing its vote this year. Only 56.8 percent of shareholders supported the 2019 payroll and the Representative Services for Institutional Advisory Representatives and Glass Lewis advised investors to vote against the 2020 salary.

Most of Kotick’s $ 155 million package was awarded in 2016 in connection with the goal of doubling its market capitalization. Activision shares surpassed that target by a 58 percent jump in 2020 when consumers turned to its popular franchises, from World of Warcraft to Crash Bandicoot. Strong stock returns typically anger investors with large-scale executive salaries, but Kotick’s large awards raised concerns.

Activision made significant changes to address the payroll problems of the CEO, whose total salary is 2.55 times higher than the company’s equivalent, the ISS said. Similarly, Activision’s median employee was 1,560 times higher than the 319: 1 ratio in 2019.

Suspending the meeting may be appropriate in some cases, such as when a development that breaks down late changes events in a proxy contest or an M&A proposal, CII Davis said, “Activision is not one of those cases.”

The delay in the vote is a “sign of despair” and because investors are excited about Kotick’s support for the company, which is a last-ditch effort, said an unrelated director with Activision.

Government experts said it was also rare to suspend voting on other issues, but noted a 2000 case in which the Wisconsin investment committee sued Peerless Systems when the tech company stopped voting on a stock option plan. This gave him extra time to ask for enough help to move the motion forward.

The parties agreed, but not before the Delaware Chancery Court ruled that “interruptions aimed at interfering with the results of a valid shareholder vote will create deep judicial suspicion” and noted that the commissions must have “strong justification” for such delays.

Following last year’s closed salary vote, Activision focused on institutional investments in terms of executive salaries. “But frustrated and ironically, because of the company’s extraordinary stock performance, large equity awards appear,” said Betty Huber, Davis Polk’s attorney.

Although the paid vote is not binding, Activision urged investors to focus on the pay changes made by the company and the good performance of the stocks, he said.


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