New lawsuit alleges Activision CEO Bobby Kotick used Microsoft sale to ‘escape liability’
Activision Blizzard has been hit with another lawsuit, this time from New York City. The suit was filed Monday in the Court of Chancery in Delaware as part of a complaint to push Activision Blizzard to reveal documents for investigation of possible wrongdoing.
The new suit, first reported by Axios, comes from various New York City employee retirement and pension funds which own Activision stock. The group alleges that Activision Blizzard’s board, and specifically CEO Bobby Kotick, cost the company value, underselling the game publisher to Microsoft as a means of benefiting itself and escaping potential liability.
The suit also alleges that Kotick “was aware of numerous credible allegations of misconduct by the company’s senior executives — but did nothing to address them or prevent further offenses.”
The suit asks that Activision Blizzard be forced to hand over many documents, including those related to the company’s recent acquisition by Microsoft, as well as several longer-standing requests about the company’s workplace issues and Kotick’s knowledge of them.
This alleged breach of fiduciary duty would leave Kotick facing liability, according to the suit, making him unfit to negotiate the sale of the company to Microsoft. Because of his compromised position, the suit claims, Kotick negotiated an unfavorable deal for shareholders, which the suit says was designed as an escape plan for himself and the company’s directors.
“The speed with which Kotick moved to not just set an offer ceiling, but to execute an agreement, was to be expected,” the suit reads. “Not only did the Merger offer Kotick and his fellow directors a means to escape liability for their egregious breaches of fiduciary duty, but it also offered Kotick the chance to realize substantial nonratable benefits.”
The merger price itself is also a point of contention in the suit. The final price of $95 a share, the suit alleges, was just a 1.16% premium to Activision’s 30-day average stock price prior to the first lawsuit it faced from California’s Department of Fair Employment and Housing. The suit also takes issue with Activision’s choice to promote the the deals being a “45.3% premium,” because this price was only true after the company’s value was lowered by the bevy of lawsuits, which were brought about by the “board’s own misconduct,” according to the suit.
Reached for comment, a spokesperson for Activision Blizzard told Polygon, “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”
This latest lawsuit is just one of many that Activision Blizzard has faced in the last year, beginning in July 2021, when the company was sued by California’s DFEH. Several suits followed, including one on the part of several company shareholders, and one from March 2022 that alleges rampant sexism within the company’s workplace. In January 2022, Microsoft announced it planned to acquire Activision Blizzard, with Kotick staying on as CEO at least until the acquisition is expected to be complete.
Source: Read Full Article