Activision urges shareholders to vote against proposed misconduct report

Activision Blizard is urging shareholders to vote against two proposals on the table at its upcoming annual shareholder meeting: One that would see an "employee representative" added to its board of directors, and another that calls for the creation of an annual public report on the company's efforts to combat abuse, harassment, and discrimination in the workplace.

Microsoft's acquisition of Activision Blizzard will naturally loom large at this year's shareholders meeting, but the company's handling of widespread workplace misconduct allegations that have come to light over the past year, and the unionization efforts they helped catalyze, are also major points of focus.

"Activision Blizzard has implemented a number of initiatives designed to enhance our workplace culture," CEO Bobby Kotick said in his opening comments of the shareholders annual meeting notice. "Maintaining the very best workplace remains our focus, and we believe having such a workplace will give us a competitive advantage in attracting and retaining the highly in-demand talent we need to operate successfully.

"We intend for Activision Blizzard to be recognized as a model for other companies to emulate in the areas of inclusion, respect, and safety. We have made achieving this objective a top priority for the near and long term as we believe this will enable us to deliver the very best games for our players and returns for our shareholders."

Kotick said Activision Blizzard has made "significant progress" toward improving workplace conditions through "new resources, commitments, and investment in our workplace with respect to the prevention of harassment, discrimination, and retaliation," and noted that the company now publicly releases data on pay equity and employee representation. All noteworthy steps, no doubt—but at the same time, the company opposes two shareholder proposals that would seem to extend those efforts even further.

One proposal recommends that an Employee Representative Director, nominated by non-management employees, be added to Activision Blizzard's board of directors. The presence of employee representation on the board, which is "common in Europe" according to the proposal, can improve communications, employee relations, and productivity. Also very important (from a shareholders perspective, at least), a recent German study "did not find any negative profitability effects or detrimental changes in wages or investment levels resulting from employee representation on boards."

Activision Blizzard's board of directors rejected that position, however, saying that allowing employees to select their own representative to sit on the board "seeks to replace the careful judgment of the Board as to the criteria that should be reflected in a director candidate pool."

"The Board and Nominating and Corporate Governance Committee must have discretion to determine the director criteria to best serve the shareholders of the Company, as this continuously evolving criteria is necessary to help guide the Company in achieving its strategic priorities and managing risk," the board wrote. "This is particularly important in light of the scope and complexity of the Company’s business. Providing non-management employees with a dedicated position on the Board utilizing a different process for Board representation or applying a different set of qualifications would adversely affect the role of the Board in this process."

The second proposal, for an annual report detailing Activision Blizzard's efforts to combat workplace abuses and misconduct—and the results arising from those efforts—was met with similar disdain.

"First, the Board believes that, rather than diverting energy and resources toward creating yet another report, we should continue to directly respond to employee concerns," the board wrote. "Focusing all our attention on these concerns is the best way quickly and effectively to create genuine change in our workplace.

"Second, the proposed report itself, even if completed after significant time and expense, would create a set of metrics that are simply not the best measures of how the Company is responding to employee concerns. The Board is committed to measuring the speed and effectiveness of our changes accurately, not based on metrics that are not precisely tailored to our Company’s situation."

The company also warned that disclosing such data publicly, even aggregated, "could potentially reveal more information about an individual employee’s allegations than that employee would wish to reveal." Excluding data at employee request, on the other hand, would lead to potentially inaccurate or misleading results; either way, the proposed reports would "divert resources away from our continuous efforts to improve our workplace culture and ensure a safe working environment."

The responses to the proposals bear more than a passing resemblance to Activision Blizzard's reaction to unionization talk in 2021, when it said that improvements in the workplace could be more quickly and effectively implemented without a union. Unsurprisingly, that statement drew considerable scorn on social media, but Activision Blizzard repeated it in a brief note on the progress of the unionization campaign currently underway at Raven Software.

"We deeply respect the rights of all employees to make their own decisions about whether or not to join a union and to exercise all other National Labor Relations Act rights," the notice says. "Across the Company, we believe that a direct relationship between managers and team members allows us to quickly respond and deliver the strongest results and opportunities for employees."

The statement also says that approval for the petition to form a union at Raven came from "a Regional Director of the National Labor Relations Board," and that Activision Blizzard is now "reviewing legal options regarding a potential appeal." The company opted against voluntarily recognizing the union in January. 

Voting on the proposals, and others including new board nominations and executive compensation packages, will take place during the annual shareholders meeting on June 21. Interestingly, the vote on both proposals will be non-binding: The board "will carefully consider the outcome of the vote," but "ultimately has a duty to act in what it believes to be the best interests of the Company and all its shareholders."