The Investors Trying to Fix the Most Toxic Company in Video Games
In July, the California Department of Fair Employment and Housing sued video-game giant Activision Blizzard, alleging, more or less, that the company has a workplace environment from hell. Regulators said a two-year investigation into the company revealed an alcohol-drenched “frat boy” culture that included inappropriate conduct by executives, men openly joking about rape, and a general “breeding ground for harassment and discrimination against women.” The company called the lawsuit “truly meritless and irresponsible” (though it seemed to have some trouble figuring out how to respond), and more than 2,000 current and former employees responded by putting their names on an open letter that said, “We no longer trust that our leaders will place employee safety above their own interests.” In early August, employees shared their salaries en masse, Bloomberg reported, to pressure the company into confronting pay inequities. One executive, Blizzard head J. Allen Brack, resigned. California has since expanded its suit against the gamemaker, alleging the company shredded documents “related to investigations and complaints.” Activision Blizzard denied these allegations, and the fate of the legal and organizing efforts is uncertain.
A third source of pressure on Activision Blizzard to make changes, beyond workers and the state of California, is a shareholder group. The Strategic Organizing Center Investment Group is an umbrella organization that represents pension funds sponsored by the members of four national unions (the Teamsters, Service Employees International Union, Communications Workers of America, and United Farmworkers of America). The SOC doesn’t manage union members’ money. Instead, it communicates with companies on behalf of the funds holding its union members’ investments, with an eye toward growing those investments. The group says it represents 3 million shares in Activision Blizzard through its members’ index holdings, which translates to around 0.4 percent of the company’s total outstanding shares—not a massive stake, but one big enough to make some noise. (No holder has more than about 8 percent of the company.)
The SOC isn’t just putting the screws to Activision Blizzard over the harassment case. In June, weeks before the California lawsuit put Activision Blizzard in the news for its workplace problems, the SOC—which recently changed its name from Change to Win—mounted an aggressive (and ultimately unsuccessful) push to get shareholders to vote against a $150 million pay package for CEO Bobby Kotick. The company pushed the vote back a week from its annual meeting earlier in June, apparently fearing an embarrassing, though nonbinding, loss. It also felt compelled to rebut the SOC in a letter to shareholders filed with the Securities and Exchange Commission on June 11, three days before the June 14 meeting. After Activision Blizzard’s workplace problems came to public light, the SOC stepped up its pressure campaign. It has urged the company to add women and employees to its board, claw back bonuses from abusive executives, stall all executive bonuses in 2021, and submit to a company-wide equity review. It also criticized Activision Blizzard for hiring noted union-busting law firm WilmerHale to investigate it in the wake of the lawsuit, saying the firm has “has no track record of uncovering wrongdoing.”
The SOC effort has generated a fair bit of media coverage—including this post, to be meta about it—and generally been a thorn in Activision Blizzard’s side, though it has so far failed to achieve its objectives. So I talked with the group’s research director, Richard Clayton, about whether shareholders can really play a role in improving working conditions, what happens when shareholder and worker interests collide, and what one group of investors can really do in the case of Activision Blizzard. This interview has been edited for clarity and length.
https://slate.com/business/2021/08/activision-blizzard-sexual-harassment-lawsuit-strategic-organizing-center.html