ACTIVISION BLIZZARD, INC. Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On
When considering and approving the Extension Amendment, our Compensation
Committee noted the Company's remarkable performance under the CEO's 30+ years
of outstanding leadership after having rescued ATVI's predecessor company from
near insolvency. Acting as a founder of what our Company has become today,
· ATVI's market capitalization has increased from less than
$70 billion dollars under his leadership, including more than doubling during the term of the CEO's Employment Agreement.
· ATVI's total shareholder return has significantly outperformed the S&P 500.
Over the 20 years between 2000 and 2020, ATVI's total shareholder return increased over 8,100%, compared to an increase of 322% for the S&P 500.
· ATVI's market capitalization has increased at a 26% compound annual growth rate
over the past 20 years throughApril 27, 2021 , among the very highest in the Company's peer group and well above the S&P 500 median growth of 9%.
· ATVI's total shareholder return over the last five years through to
2021, was 175%, 71 percentage points higher than the median of the S&P 500.
· Over the five years through to
billion in incremental market value for its shareholders. The median S&P 500 company has created$12 billion in incremental market value during the same time period.
· ATVI's 2020 total shareholder return of 57% is near the top decile of the
Company's peer group and substantially above the S&P 500 median of 10%.
· ATVI's dilution rate over the last three years was 0.85% on average and ranks
among the lowest of any member of our peer group.
As one of the longest serving Fortune 500 founders and CEOs,
Taking into account the feedback received through this extensive outreach
program and the Board's desire to retain the CEO to continue to successfully
lead the Company into the future, the Board determined that it is in the best
interest of the Company and its shareholders to extend the Employment Agreement
until
The CEO voluntarily agreed to reduce his base salary by 15% in 2020. Under the
Extension Amendment, effective
The Compensation Committee and CEO also agreed to reduce his target annual bonus
by 50% (i.e., a potential reduction of
The Annual Bonus will be based eighty percent (80%) on the attainment of Company non-GAAP financial objectives (the "Financial Metrics") and twenty percent (20%) on the achievement of objective and measurable Environmental, Social, and Governance ("ESG") initiatives for the fiscal year with respect to which the Annual Bonus accrues, in each case, as established by the Compensation Committee.
Achievement of the Financial Metrics and ESG initiatives for each fiscal year shall be determined by the Compensation Committee. The Compensation Committee shall also determine the form in which the Annual Bonus for each fiscal year will be paid. The Company will pay any earned Annual Bonus no later than two and a half (2 ½) months after the end of the fiscal year for which the Annual Bonus is awarded; provided that, except as otherwise provided in the Extension Amendment, the CEO remains continuously employed by the Company through the date on which the Annual Bonus is paid.
The Extension Amendment provides that the CEO will be granted future long-term equity incentive awards for fiscal years 2021 and 2022 (the "Future Long-Term Incentive Awards"), each year intended to have a grant date value (determined in accordance with generally accepted accounting principles) no greater than the 50th percentile of the Company's then-applicable group of peer companies' chief executive officer long-term incentive grants (as determined by the Compensation Committee). Each Future Long-Term Incentive Award shall be one hundred percent (100%) comprised of performance vesting restricted stock units subject to cumulative financial performance metrics for three full fiscal years. Any such Future Long-Term Incentive Awards shall remain outstanding and eligible to vest based on performance so long as the CEO continues to provide services to the Company.
The Extension Amendment deletes Section 6(d) of the Employment Agreement, which provided an opportunity for the CEO to earn additional awards and payments in the event of a "Transformative Transaction" (as defined in the Employment Agreement).
The Extension Amendment also provides that the Shareholder Value Creation Incentive outlined in Section 12 of the Employment Agreement will not apply to any long-term incentive awards granted on or after the Amendment Date, including any Future Long-Term Incentive Awards. Any Future Long-Term Incentive Awards granted under the Extension Amendment will be subject to the same treatment and limitations of Section 10(b)(ii) of the Employment Agreement.
All other terms of the Employment Agreement remain in full force and effect.
The foregoing description is not a complete description of the Extension Amendment and is qualified in its entirety by reference to the full text of the Extension Amendment, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference in this Item 5.02.
Item 9.01. Financial Statements and Exhibits. (d) Exhibits 10.1 Extension Amendment, datedApril 28, 2021 , betweenRobert A. Kotick and the Company 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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