Activision Blizzard CEO Bobby Kotick would consider leaving if he can't fix problems

Activision Blizzard Inc. ATVI -0.46% Chief Executive Bobby Kotick has told senior managers he would consider leaving the company if he can’t quickly fix the culture problems at the videogame giant, according to people familiar with his comments. 

Mr. Kotick, who has led Activision for three decades, stopped short of saying he would step down in a Friday meeting with executives of the company’s Blizzard Entertainment unit, but left the possibility open if misconduct issues across the company weren’t fixed "with speed," these people said. 

Mr. Kotick is facing criticism from Activision’s employees, investors and business partners over how he and the company have handled allegations of sexual misconduct. Some employees and investors have called for him to resign in the wake of a Wall Street Journal investigation into his handling of sexual-misconduct allegations and multiple regulatory probes into the company’s culture. 

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A company spokeswoman didn’t respond to requests for comment. 

Shares of Activision have fallen more than 14% since the Journal article published online Nov. 16, and about 30% since the first of the regulatory investigations into the company’s culture was made public in late July. 

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The Journal article, citing interviews and internal documents, described how Mr. Kotick knew of sexual misconduct allegations across the company, including rapes, and didn’t report them to the company’s board of directors. It also detailed misconduct allegations against Mr. Kotick, including when he threatened in a voice mail to have an assistant killed. 

In response, Mr. Kotick has said he has been transparent with his board, and an Activision spokeswoman has said he wouldn’t have been informed of every report of misconduct. The spokeswoman said Mr. Kotick regrets the alleged incident with his assistant. In October, the company announced a zero-tolerance harassment policy and that it would end mandatory arbitration for harassment and discrimination claims. 

The comments Friday by Mr. Kotick were part of a series of internal meetings across Activision last week in which Mr. Kotick and other company leaders met with employees to reaffirm their commitment to a healthy workplace, according to people familiar with the meetings. 

As of Sunday, more than 1,700 employees, representing roughly 17% of Activision’s approximately 10,000-member workforce world-wide, had signed an online petition calling for Mr. Kotick to step down, and some workers also staged a walkout Nov. 16. 

Mr. Kotick held meetings last week with senior leaders from two of the company’s three major operating units: Activision Publishing and Blizzard Entertainment, according to some of the people. 

At an online meeting Friday, top executives of Activision Publishing relayed to Mr. Kotick that some employees wouldn’t be satisfied unless he resigned, according to those people. 

Mr. Kotick said he was ashamed of some of the incidents that had happened on his watch and apologized for how he has handled the unfolding problems, they said. 

In addition, executives and human-resources managers held online meetings with groups of employees last week, according to people who attended. At these meetings, some staffers asked whether Activision’s recently announced zero-tolerance policy for harassment and other misbehavior applied to Mr. Kotick’s past behavior reported by the Journal, attendees said. Others asked whether Mr. Kotick would resign, they said. 

Managers running some meetings said they didn’t have specific answers to those questions and reiterated Activision’s intention to have a welcoming and inclusive workplace, the people who attended said. 

Activision’s board of directors is considering creating a "workplace excellence committee" to oversee implementation of steps the company is taking to improve its culture but hasn’t taken steps to separately investigate Mr. Kotick, according to people with knowledge of the plans. 

The board has backed Mr. Kotick, saying Tuesday it "remains confident that Bobby Kotick appropriately addressed workplace issues brought to his attention." 

Besides Mr. Kotick, Activision’s board of directors includes nine people, several of whom have long connections to the company or the CEO. Chairman Brian Kelly was part of the team that acquired the assets of the company that became Activision Blizzard in 1991. Robert Morgado, the lead independent director, has been on the board since 1997. Two other members first joined in 2003. 

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The other five include Hendrik Hartong III, a former Activision marketing executive; Reveta Bowers, longtime head of a private school Mr. Kotick’s children attended, where he previously sat on the board of trustees; and Casey Wasserman, a sports and media executive who has been on the board of the Los Angeles County Museum of Art with Mr. Kotick since the early 2000s. 

Mr. Kotick, 58 years old, has presided over Santa Monica, Calif.-based Activision since the early 1990s, turning it into a videogame juggernaut with the publication of hit franchises Call of Duty, World of Warcraft and Candy Crush. Activision has been facing increased regulatory scrutiny of its culture since late July from state and federal regulators, including a Securities and Exchange Commission investigation into Mr. Kotick’s handling of misconduct allegations. 

An Activision spokeswoman has said the company has made significant changes to address company culture and create a safer environment for workplace complaints. 

The nonprofit group Girls Who Code, which promotes female participation in computing careers, said in an online post Thursday that it was ending a three year-old partnership with Activision on its summer immersion program for high-schoolers. "We cannot in good conscience continue to work with a company that is so antithetical to our own values," the group wrote. 

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Analysts have downgraded the stock, with Truist Securities on Friday calling for a chief executive change. A CEO change at Activision Blizzard is expected, necessary and should be viewed as a positive, the note said. SOC Investment Group, which owns less than 1% of Activision shares, is one of the investors that has called for Mr. Kotick to resign. 

Two of Activision’s largest business partners, Sony Group Corp. and Microsoft Corp. , have expressed concern, with Xbox maker Microsoft saying it was re-evaluating its relationship with the company. 

This article first appeared in the Wall Street Journal