Investors’ concerns are mounting over the direction of
The company, known for hit video games like Call of Duty and World of Warcraft, has been in turmoil since the summer, when it was
The scandal has
And that was before Tuesday, when the situation got even tougher for Kotick. Explosive revelations by the Wall Street Journal tie the CEO to allegations of mistreatment of women and suggest that he was aware for years of sexual misconduct, including rape, at the company but didn’t report it to the board. The newspaper cites interviews, company emails, regulatory requests and other internal documents in its reporting.
The Journal said that several women accused Kotick of mistreatment, both inside and outside the workplace, and that in some cases he worked to settle the complaints quickly and quietly. The SEC has issued
Employees, who have for months said the company hasn’t gone far enough to address complaints, staged a walkout at Blizzard’s offices in Irvine, California, on Tuesday and called for Kotick’s resignation. About 150 people showed up, carrying signs that said: “Does Zero-Tolerance Apply to the C-Suite?” and “Unaccountable Corporate Bureaucrats are Driving the Best Employees out of Activision Blizzard.”
Activision’s 10-member board, which includes two women, said it remains confident that Kotick “appropriately addressed workplace issues brought to his attention,” and said it has faith in his leadership. However, he is unlikely to retain that support if any more bad news comes to light, said a person close to a board member, who asked not to be identified discussing private conversations.
The accusations against Kotick, especially that he withheld important details from the board, put his job in jeopardy, governance experts said.
“In the current political environment, we’ve seen so many people step down or be forced to resign because of their potential knowledge of misconduct,” said Jill Fisch, a professor at the University of Pennsylvania Law School. While sexual misconduct in corporations “is a hot button issue right now,” the situation at Activision adds another layer of complexity in that “there is an independent concern here about hiding information from the board.”
Kotick also sits on the boards of the Coca-Cola Co. and the Hawks Foundation. He is listed as a trustee for the Center for Early Education and the Harvard-Westlake School, according to data compiled by Bloomberg. A Coca-Cola representative didn’t immediately respond to a request for comment on Kotick’s status as a board member.
The 58-year-old Kotick launched his first company, a software developer, while still a student at the University of Michigan. In 1990, he and partner Brian Kelly bought control of a nearly bankrupt video game maker called Mediagenic and changed its name back to Activision. He has led Activision since 1992 and oversaw the incorporation of Blizzard Entertainment Inc. and a raft of other studios such as Candy Crush maker King Digital, allowing them to operate mostly independently as part of a strategy to encourage the development of hit games.
As a result, games like Diablo and Warcraft, are among the most acclaimed on the market. The Blizzard division was regularly ranked among the best places to work and served as a shining example of how to build a long-running game studio.
So when the California lawsuit landed last summer, it sent shockwaves through the gaming world and broader public for the graphic images it portrayed about Blizzard— including “cube crawls,” in which male employees “drink copious amounts of alcohol as they crawl their way through various cubicles in the office and often engage in inappropriate behavior toward female employees.”
But to many within the company, it was no secret that partying and sexism were long part of Blizzard’s office culture.
Video game companies were late to the global reckoning prompted by the #MeToo movement, which led to the ouster of prominent leaders across industries. In 2018, veteran CBS Corp. CEO Les Moonves was forced out after more than a dozen women accused him of sexual misconduct, and he was stripped of
Chiefs at Barnes & Noble Inc. and Lululemon Athletica Inc. were ousted for sexual harassment allegations as well, and CEOs at Intel Corp. and the REI outdoor-equipment chain both resigned after news of consensual relationships with employees emerged, underscoring the changes in expectations for work environments. Microsoft Corp.’s Bill Gates also was tainted by scandal. The Wall Street Journal reported that the board found that the software billionaire’s involvement with a female employee almost two decades ago was inappropriate and decided last year that he would have to
In the past year and a half, the video game industry began to have its own reckoning, prompted by an
While three high-ranking executives were
If Kotick were to leave, the company has several potential successors waiting in the wings. They include Chief Operating Officer
The July lawsuit from California’s employment watchdog and earlier
Last month, the company said more than 20 staff “
On Tuesday, Kotick doubled down on his defense of the company’s action. In a video to employees seen by Bloomberg he said, “Anyone who doubts my conviction to be the most welcoming and inclusive workplace doesn’t really appreciate how important this is to me.”
But Kotick’s efforts may be too little, too late. On Tuesday, a
It says the publisher’s directors and officers also failed to tell investors about state and federal investigations into its allegedly discriminatory workplace culture for more than two years, instead referencing “routine claims and lawsuits” in its securities filings, according to the partially redacted complaint filed in the U.S. District Court for the Central District of California.
(Updates with shares in fifth paragraph.)
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