Bobby Kotick’s Payout Is A Small Price For The Good That Could Come From Microsoft’s Acquisition

Microsoft’s announcement of a planned acquisition of Activision Blizzard sent ripples through the industry for a number of different reasons. The ramifications for Microsoft’s library, Xbox Game Pass, exclusivity, and more are all staggering. But much of the discussion has centered on what will ultimately happen to current Activision Blizzard CEO Bobby Kotick, who for months has been resisting pressure to resign amid allegations of a toxic workplace culture and lax-at-best leadership. With news of the acquisition, Kotick is likely headed for a massive payday at the end of this process, which just feels wrong. And while this, rightly, will be a difficult pill to swallow for many, as a practical matter, it’s important to focus on the positive steps that will improve working conditions for the employees and the role we can have in ensuring this happens.

First, to state the obvious: Yes, it is viscerally frustrating for bad actors to be rewarded in society. It feels unjust. We have a cosmic sense that karma isn’t supposed to work that way. So the focus on Kotick’s payday is totally understandable. Assuming the allegations regarding his own culpability in failing to respond to a culture of harassment and abuse are true, it is extremely human to bristle at the idea that a big fat paycheck is coming his way as a reward for enabling the work culture that has led to the widespread reports of toxicity at Activision Blizzard and then stubbornly refusing to step aside.

To offer a thousand-foot view, though, Bobby Kotick is already obscenely rich, with a net worth valued at $870 million. That is a level of wealth that is difficult to wrap one’s mind around. It’s enough to last hundreds of lifetimes without working another day, even before you account for how investments and interest can themselves produce all the money you’d ever need to live comfortably. The large payout that probably awaits Kotick at the end of this acquisition is not likely to make his life discernibly easier than it already will be. According to SEC documents, he would certainly be getting a generous payout upwards of $260 million upon leaving the company whether an acquisition had happened or not. It’s very much a case of the rich getting richer. His accumulation of even more wealth is frustrating as a matter of principle, not practicality.

On the other hand, the acquisition may be Activision Blizzard’s best chance to make substantial, meaningful improvements to worker conditions and studio culture. Microsoft is a large corporation with standardized structures to minimize workplace harassment, and we have not heard reason to believe its leadership has allowed abuses similar to those at Activision Blizzard in severity or scale. By most accounts Microsoft is a generally fine place to work, certainly in comparison to the company it has just acquired. Having that culture in place and having it be the top of the organizational power pyramid should help root out bad elements and set clearer expectations of conduct.

“[Kotick’s payout] will be a difficult pill to swallow for many, as a practical matter, it’s important to focus on the positive steps that will improve working conditions for the employees and the role we can have in ensuring this happens.”

Perhaps more importantly, Microsoft should know exactly what it’s getting into with this acquisition. One reason Microsoft was able to purchase one of gaming’s biggest publishers at a relatively low share price is because the harassment scandal has led to a drop in that share price. As noted by lawyer Richard Hoeg, who also explained some antitrust intricacies, the stock price and cultural issues are probably linked.

“What I find most interesting about the $95 per share price is how closely it matches up to the market price for Activision last year before its present troubles,” Hoeg said. “One could even argue that it’s not a premium to the true value of Activision’s underlying assets, and that Microsoft is, in fact, ‘buying low’ based on the premise that the price is depressed for cultural reasons that can be ‘cleansed’ through an acquisition (and related control of the entities by Microsoft itself).”

So what we have is a company with a relatively clean and responsible reputation acquiring a company with anything but, at a price that has been depressed by recent scandal, with the implied market expectation being that the parent company will help sort things out. It’s in Microsoft’s own financial interest to clean house and reform Activision’s tattered image, not to mention that it’s simply the correct, ethical thing to do.

Now is the time to set expectations for Microsoft’s stewardship of the company, and then plan to make sure Redmond follows through once the acquisition is finalized. Microsoft will need to set clear guidelines with consistent consequences for misconduct and a greater degree of transparency, and enable more diversity of voices inside Activision Blizzard’s various studios. Though Activision has seemingly begun rooting out toxic elements after the fact (and after a California state lawsuit), a change in leadership can send a signal that such behavior will not be tolerated in the first place.

In the coming months, as Microsoft and Activision Blizzard finalize the paperwork and go through the regulatory hurdles, more news is bound to come out. It’s likely that we’ll hear more about Bobby Kotick, who reportedly turned a blind eye to the rot in his company, getting a hefty payout. Again, that will just feel wrong on a gut level and we as people that have a love of the industry should express our disdain towards the behavior and condemn it. But when that happens, it’s also important to try to keep in mind that Kotick being and remaining incomprehensibly wealthy was going to happen regardless of an acquisition. Where our collective voice has more power now is in supporting those within Microsoft and Activision Blizzard striving to ensure conditions improve. There was never a world where Kotick might suffer any level of actual financial comeuppance, whatever his level of responsibility, but we can help push for a world where Activision Blizzard’s new leadership doesn’t perpetuate the same kind of irresponsibility and avoidance of consequence.

Microsoft purchasing Activision Blizzard gives the workers their best chance to have a healthier workplace. If one ousted CEO adding another stack of bills to his already enormous pile of money is what it takes for that to happen, it will be worth the trade.