New York City pension fund officials sued Activision Blizzard late last month in a bid to force the company to disclose records that may uncover whether CEO Bobby Kotick breached his fiduciary duty to investors, according to a newly released copy of the complaint.
The complaint by the New York City Employees’ Retirement System, along with pension funds representing city teachers, police and firefighters, seeks to open up the books at Activision Blizzard to prove whether Kotick negotiated the company’s $68.7 billion sale to Microsoft as “a means to escape liability” stemming from allegations he turned a blind eye to years of staff harassment claims within the company. The funds are investors in Activision Blizzard, and claim that misconduct by Kotick and the company’s board have undercut shareholder value.
On Wednesday, Activision Blizzard told CNN in a statement: “We disagree with the allegations made in this complaint and look forward to presenting our arguments to the Court.”
CNN obtained a public version of the complaint dated May 2 from the Office of the New York City Comptroller. The original complaint, filed in the Court of Chancery in Delaware, was dated April 26. Asked for comment, the New York City comptroller’s office referred CNN to the New York City Law Department, which is handling the litigation. The department didn’t immediately respond to a request for comment.
The complaint was first reported by Axios.
Thanks to the Microsoft deal, the complaint alleged, “Kotick will be able to escape liability and accountability entirely, and will instead continue to serve as an executive after the Merger closes. Worse, despite his potential liability for breaches of fiduciary duty, the Board allowed Kotick himself to negotiate the transaction with Microsoft. The Board’s decision to entrust Kotick with the negotiation process is inexcusable for the additional reason that Kotick stands to personally receive substantial material benefits whose value is not directly aligned with the Merger price.”
Kotick stands to receive a $22 million bonus for meeting workplace culture goals that “almost identically track” the company’s settlement this year with the Equal Employment and Opportunity Commission, according to the complaint.
The suit is the latest legal headache for Activision Blizzard, which faces an array of federal probes and investor suits tied to the allegations of workplace misconduct.
The complaint follows multiple requests for Activision Blizzard records by NYC pension officials since October 2021, and it argues the company has been insufficiently responsive. Among the records now sought by the officials are board presentations, minutes, memos and other documents related to the Microsoft deal and specifically related to Kotick’s role in the matter.