Take Activision Blizzard (ATVI), for example, which filed this 8-K at 4:31 yesterday afternoon. The filing provided key details — but not the actual agreement — of a new employment agreement with longtime Co-Chairman Brian G. Kelly. Now the details alone make the filing dump-worthy. There’s a guaranteed bonus of at least $15 million if the company undergoes a change in control. But the real number is likely to be quite a bit more, because the filing describes the bonus like this:
“Pursuant to the Kelly Employment Agreement, if there is a change in control (as defined in the Kelly Employment Agreement) during the term of his employment under the Kelly Employment Agreement or if Mr. Kelly is terminated without cause (as defined in the Kelly Employment Agreement) during the six months prior to a change in control, Mr. Kelly will be entitled to a cash bonus payable upon such change in control in an amount of at least the greater of (1) $15,000,000 and (2) fifty-percent (50%) of any comparable bonus paid to the Company’s Chief Executive Officer, Robert A, Kotick.”
Back in March, Activision filed a somewhat similar 8-K with details of a new agreement for Kotick. One significant difference is that Kotick’s guaranteed bonus upon a change in control is stated as $30 million, although it can go up to $45 million. So that means that under Kelly’s new agreement, he could wind up with $22.5 million upon a change in control. There are also some other compensation components described in yesterday’s filing, most notably $25 million in options, divided between restricted and performance-based shares.
Now, most change in control language in contracts is often theoretical. But as Bloomberg has been reporting for the past month, Vivendi SA (VIV), which owns about 61% of Activision, has been looking to sell the company and supposedly had a meeting to discuss this two weeks ago. Bloomberg was also the first to pick up the news of yesterday’s revised contract with Kelly.
One other interesting tidbit about Kelly’s contract: Unless we’re missing something, his prior employment contract expired on March 31, 2011; if so, that means he’s been working without a contract for the past 16 months. Whether that was an oversight or done intentionally, though, remains to be seen.
It’s a perfect day for companies to pay a visit to the SEC filings dump. At footnotedPro, our subscription service exclusively for financial professionals, we identify early warning signs and hidden red flags well in advance of the market. For more information, or to inquire about a trial subscription, please email us.