New York City Sues Activision For Letting 'Unfit' Bobby Kotick Negotiate Microsoft Deal

New York City is suing Activision over an ongoing merger deal with Microsoft for the gaming company allowing CEO Bobby Kotick to conduct the negotiations. The city alleges that Kotick rushed the merger as a means to avoid liability for misconduct under his watch at Activision-Blizzard.

On Tuesday, five New York City pension funds filed a lawsuit in Delaware Court of Chancery against Activision on the grounds that the merger with Microsoft was done in a manner that harmed the company's value and negatively impacted the stocks they hold in the gaming giant.

The plaintiffs took aim at Kotick and his handling of workplace harassment and discrimination against female and minority employees at Activision.

They specifically accused Activision of “inappropriately” allowing Kotick to negotiate with Microsoft for a deal that they said would allow him to avoid any liability for any breaches of fiduciary duties as CEO. They alleged that Kotick was positioned to dodge accountability while receiving significant compensation.

"With the announced Merger, Kotick will be able to escape liability and accountability entirely, and will instead continue to serve as an executive after the Merger closes," read a public version of the lawsuit shared by the New York City Comptroller's Office.

"The Board’s decision to entrust Kotick with the negotiation process is inexcusable for the additional reason that Kotick stands to personally receive substantial material benefits whose value is not directly aligned with the Merger price,” the statement read.

As part of the lawsuit, the city is pushing Activision to share documents related to the merger deal as well as others related to the company’s workplace harassment allegations. The pension funds had previously requested access to documents related to the latter last October, but they said that Activision has not turned over all of the requested documents.

Activision-Blizzard was rocked by allegations in 2021 that it presided over a toxic work environment rife with sexual harassment and discrimination. Kotick promised to push changes at the company after a lawsuit was filed by the state of California, but an investigation by the Wall Street Journal in November showed he did not alert the Activision board of the mounting allegations.

Kotick previously said that he would step down from his post if he failed at reforming Activision’s workplace. However, he has also indicated an interest in staying on as CEO after the deal between Microsoft and Activision is concluded.