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Activision Shareholders Sue to Block $69 Billion Microsoft Deal

Complaints raise questions about board members’ conflict of interest

Activision shareholders are suing the gaming company in an attempt to block a proposed $68.6 billion sale to Microsoft that was announced in January.

Two lawsuits filed in California and New York federal court on Thursday say the company’s board of directors have a conflict of interest in the approval of this massive deal. Shareholders argue in the lawsuits that Activision’s insiders negotiated large portions of company stock and equity awards that they will get after the deal is approved, pending any antitrust scrutiny.

“The process deployed by the Individual Defendants was flawed and inadequate, was conducted out of the self-interest of the Individual Defendants and was designed with only one concern in mind — to effectuate a sale of the Company by any means possible,” the complaint filed in California said.

The lawsuits also state that shareholders were not provided with vital information, such as Activision’s operating income and revenue, that is needed to assess the deal with Microsoft.

“The omission of the above-referenced information renders statements in the Proxy Statement materially incomplete and misleading in contravention of the Exchange Act,” the New York complaint read. “Absent disclosure of the foregoing material information prior to the special stockholder meeting to vote on the Proposed Transaction, Plaintiff will be unable to make a fully-informed decision regarding whether to vote in favor of the Proposed Transaction, and she is thus threatened with irreparable harm, warranting the injunctive relief sought herein.”

The shareholders also take issue with the “golden parachute packages” reserved for senior management that would provide payouts to CEO Bobby Kotick, the chief financial officer and the chief operating officer if they are terminated.

According to the company’s 2021 proxy filing, Kotick could be due a golden parachute worth almost $293 million if terminated due to a “change in control.” If Kotick were terminated “for cause,” he’d be entitled to continuing benefits worth just $264,524, according to the document, which is filed annually with the SEC. Had he been terminated “without cause,” or had Kotick ended his own employment “for good reason,” the CEO would be due a whopping $265.2 million.

Kotick has also been at the forefront of the company’s troubles. In July, the studio was hit with a civil lawsuit from California’s Department of Fair Employment and Housing, claiming the company was “akin to working in a frat house.” The alleged sexual harassment included inappropriate comments about women’s bodies, rape jokes and unsolicited touching of female employees.

Pamela Chelin contributed to this report.

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