Rocking the comp at Activision Blizzard…

April 19, 2011

As if the thrill of leading the world’s largest video game publisher weren’t enough – together with the six- and seven-figure salaries that flow to the company’s executives – it turns out that there are other nice rewards, too.

The company, Activision Blizzard, Inc. (ATVI), created such blockbuster games as Guitar Hero and Call of Duty. Its proxy, filed yesterday with the SEC, offered some interesting details into how compensation is paid to those in the upper ranks.

For starters, president and CEO Robert Kotick’s base salary is still ticking upward at a pretty nice clip (although it should be noted that Kotick declined taking a raise in 2008 and 2009). But after getting a $56,000 raise from 2009 to 2010, his salary jumped another $47,677 on Jan. 1, 2011. And the raises aren’t likely to stop any time soon, since the proxy notes that Kotick’s employment agreement mandates that his salary “…will be increased automatically as of January 1st of each year, in an amount at least equal to the average percentage increase approved by the Compensation Committee for members of the executive leadership team….”

In addition, the compensation committee gave Kotick $1.9 million in stock awards and $2.2 million in non-equity incentive compensation (the latter more than $540K higher than last year’s incentive compensation bonus). Activision Blizzard also paid him more than $411,000 in dividends on his restricted stock and dividend equivalent payments on his RSUs.

Even though all that involves a lot of money, it’s pretty standard stuff for executive compensation. But it turns out that Kotick also got some more unusual payments from the company. For example, the proxy discloses:

“From time to time, we purchase tickets to sporting and cultural events for use in furtherance of our business. During 2010, with the authorization of the Audit Committee, we purchased tickets to certain sporting events from Mr. Kotick. The tickets were purchased from Mr. Kotick at his actual cost (i.e. their face value), without any mark-up. The aggregate amount paid to Mr. Kotick for such tickets during the year was $302,498.”

No details are given about what sporting events are involved here, or how there’s more than $302K worth of tickets involved, but the disclosure itself is worth a little reflection. Note that the company starts out by saying “…we purchase tickets to sporting and cultural events….” The tickets are purchased “in furtherance of our business,” yet – in the next sentence – the company is paying Kotick hundreds of thousands of dollars for tickets that it appears to have bought. We suppose it’s possible that the company is paying Kotick for other tickets that he bought personally, but the proxy certainly doesn’t describe that clearly, if that’s the case.

The company also paid a charter company (in which Kotick has an indirect interest) more than $370,000 to repay him for chartering a private plane for business use. Activision reimburses him 80% of the hourly flight charge and 100% of the pass-through costs; however, the company explains that this arrangement is cost-effective, in that it “provides us with substantial value, since the net cost to us is significantly less than the cost that we would incur if we were to charter aircraft for such travel at market rates.”

Compare all this to the proxy that prompted this post, from the summer of 2007, when Michelle spotted some curious perks that were on a much smaller scale, and it gives an idea of how much the company has grown (and maybe that Activision’s compensation practices were a bit more modest at the time).

Who could ask for more? Well, perhaps the stockholders, whose shares are down 4.62% from where they traded a year ago.

Image source: JoshBerglund19 via flickr

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