New York City sues Activision, targeting CEO Bobby Kotick
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Activision CEO Bobby Kotick rushed to secure a takeover bid from Microsoft to escape liability for misconduct at the company, a new lawsuit from New York City officials alleges.
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New York City sues Activision, targeting CEO Bobby Kotick.
The New York City Employees' Retirement System and pension funds for the city's teachers, police, and firefighters filed the complaint in Delaware on April 26. The organizations own Activision stock and feel that the gaming conglomerate's management is undermining the company's worth.
The office of NYC’s comptroller shared a public version of the suit with Axios on May 3.
The lawsuit is a procedural action in Delaware's Court of Chancery (officially a "220 complaint") that permits stockholders to compel firms to open their books and perhaps uncover malfeasance.
New York City has demanded that Activision turn over a slew of documents, including information about the Microsoft agreement, information on five potential bidders mentioned in Activision's public account of the sale talks, board memos, and more.
Since the autumn, the city has been requesting internal papers from Activision, initially to learn what CEO Bobby Kotick knew about sexual misbehavior at the corporation.
According to the complaint, New York sought access to Activison's books to sue Kotick and other board members for allegedly undervaluing the firm. It indicates displeasure that Kotick, who was already under criticism, led hasty negotiations to sell the company to Microsoft in late 2021.
What does that mean?
“Given Kotick’s responsibility and liability for Activision’s broken workplace, it should have been clear to the Board that he was unfit to negotiate a sale of the Company,” the suit says, “But it wasn’t.”
According to the New York Times, the Microsoft transaction, which is still subject to regulatory approval, gives "Kotick and his fellow directors a way to avoid responsibility for their flagrant breaches of fiduciary duty."
It also claims that Microsoft's $95/share offer undervalues the company, which was trading at a similar level until Activision's public issues broke last summer.
According to a Wall Street Journal report published in November, Kotick was aware of workplace misbehavior, however, an Activision representative indicated that he would not have been aware of all employee concerns.
Kotick told the WSJ at the time that he was “committed to making sure we have the most welcoming, most inclusive workplace in the industry.”
An Activision rep declined to address the claims in the suit.
