Dec 1, 2021 - Technology

6 state treasurers pressure Activision over misconduct allegations

Photo illustration of Activision Blizzard logo and a chart of its stock price
Image: Igor Golovniov/SOPA Images/LightRocket via Getty Images

The pressure on Activision Blizzard to make meaningful change over harassment allegations, unequal pay and other workplace issues is intensifying, as treasurers from California, Massachusetts, Illinois, Oregon, Delaware and Nevada are calling on the company to take action.

Why it matters: The game-maker, which is already facing lawsuits and investigations, is now hearing from state treasurers who aren’t afraid to utilize billions of dollars of investments, often through pension funds, as a way to trigger corporate change.

  • In a Nov. 23 letter, reported here for the first time, the treasurers asked Activision Blizzard’s board of directors for a meeting “to discuss your response to the challenges and investment risk exposures that face Activision.”
  • The treasurers noted that they would “weigh” a “call to vote against the re-election of incumbent directors.”
  • That call was made earlier in November by activist shareholder group SOC. The group said Blizzard CEO Bobby Kotick should resign and threatened to vote against members of the board next year.

What they’re saying: “We think there needs to be sweeping changes made in the company,” Illinois state treasurer Michael Frerichs told Axios.

  • He cited accounts from the past few months involving harassment allegations and unequal pay at Activision Blizzard as well as a November Wall Street Journal investigation that said Kotick downplayed sexual misconduct allegations at the company.
  • “We're concerned that the current CEO and board directors don't have the skillset, nor the conviction to institute these sweeping changes needed to transform their culture, to restore trust with employees and shareholders and their partners,” Frerichs said.
  • “This particular case has been waiting for the board to step in and do an investigation,” Massachusetts treasurer Deborah Goldberg told Axios. “A true investigation, an outside investigator. And, I mean, what was it, two weeks ago that they said they stand by the CEO?”

Activision declined to comment. But a rep for SOC said the company replied to the letter yesterday to figure out next steps.

Between the lines: The treasurers manage about a trillion dollars in assets, but it’s unclear how much Activision stock — and therefore how much voting power —they have.

  • Frerichs confirmed that Illinois has investments in Activision Blizzard and is therefore impacted by the company’s plummeting stock price, but declined to say how much.
  • “One thing the Treasurers bring is also a bit of a spotlight here and a little public pressure as well,” he said. “So it's not all just about the number of dollars and number of shares that we have.“

The big picture: It’s new for treasurers to be targeting a gaming company, but this type of action has plenty of precedent.

  • A year ago, New York state announced plans to divest its $226 billion pension fund from fossil fuel companies.
  • Last month, Massachusetts’ Goldberg said her state would use its investments to pressure companies to enact better climate policies.
  • Goldberg supports engagement, arguing that divestment abandons the issues and the companies’ employees. “If you don't have a seat at the table, you don't have a seat at the table,” she told Axios

What’s next: The treasurers want a meeting with Activision by Dec. 20.

  • The company’s board could point to its proposed settlement with the Equal Employment Opportunity Commission as a sign it is serious. It includes an $18 million victims fund and a commitment to EEOC oversight for the next three years.
  • “I look at that as a penalty, as perhaps an admission of wrongs in the past,” Frerichs said.
  • “But we're long-term investors and we want to see those risks that caused that penalty addressed, so they don't happen again. You can point to, ‘Hey, we paid the victims, we're making them whole.’ But if you're continuing a culture that creates new victims in the future, you are creating more risk for your company," he added.
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