Two Activision Blizzard shareholders sued the company, alleging inadequate disclosure and conflict of interest in their filings with the Securities Exchange Commission regarding its upcoming sale to Microsoft. The $68,7 billion sale, the biggest game purchase ever, was first announced on January 18.
Polygon first reported on February 24 that only one shareholder, Kyle Watson, filed a lawsuit against the company in California, alleging that the Microsoft sale was "unfair" and "not in the best interest" of the company or its shareholders. On February 25, another shareholder, Shiva Stein, filed her own case in New York court for similar reasons. Watson's lawsuit alleges potential conflicts of interest, stating that Activision Blizzard board members and senior executives "have unique benefits for themselves" that are not available to shareholders. He also talks about the "golden parachute" packages available to certain executives, including Bobby Kotick. “Golden parachute” packages are severance packages that will be given to these executives if they leave the company. According to a report from Axios, Kotick will receive $15 million if terminated.
The SEC filing, which Activision Blizzard called "materially misleading" Watson's lawsuit, reveals more about the deal and its timeline. Specifically, it shows that talks between Microsoft and Activision Blizzard began just three days after a report from the Wall Street Journal disclosed Kotick's knowledge and involvement in workplace abuse that has plagued the company for years.
On November 18, 2021, Xbox President Phil Spencer wrote in an email to staff in response to allegations against Kotick that the company would make "ongoing proactive adjustments" to its relationship with Activision Blizzard. In a meeting with Kotick the next day, Spencer expressed “Microsoft's interest in discussing the strategic opportunities between Activision Blizzard and Microsoft.”
The new shareholder lawsuits are just the latest in a series of legal issues Activision Blizzard has been battling for the past eight months. In July 2021, the California Department of Fair Employment and Housing sued the company for gender discrimination and workplace misconduct. Since then, Activision Blizzard has continued to be embroiled in controversy as more reports of harassment and discrimination have surfaced. The company is also accused of breaking the union, especially when it comes to Raven Software, whose employees recently formed the first big-budget gaming industry alliance in North America.
