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Activision CEO Can Pocket Over $500 Million After Microsoft Deal

Activision Blizzard CEO Bobby Kotick will be richer than ever in a few years.

When it comes to the video game industry, all eyes have been on Activision Blizzard  (ATVI) - Get Free Report for the last year.

The publisher of multiple titles that rake in millions, such as "Overwatch" and "World of Warcraft," was the target of multiple sexual harassment allegations in 2021. Employees called for CEO Bobby Kotick's resignation, saying he was unfit to continue to lead the company.

Things got more complex when Microsoft  (MSFT) - Get Free Report announced in January that it intended to acquire Activision Blizzard for $68.7 billion, which would effectively transform it into one of the top three biggest players in the video game industry.

As one of the lawsuits related to sexual harassment has been resolved with an $18 million settlement and another lodged against the video game publisher by investors in regards to the upcoming sale has been dismissed, the company's reputation seems to be recovering bit by bit.

However, weaker-than-expected first-quarter earnings didn't do Activision Blizzard any favors in this process. The company's shares were 23% down from last year, and demand for its latest release in the popular "Call of Duty" franchise was less than expected.

But with even Warren Buffet investing in the company, many are wondering what's really going on on the inside and if they should add Activision to their investments. And when it comes to that, there's an interesting tidbit about it all that you should be aware of.

Xbox Activision Blizzard Lead JS

How Will Activision's CEO Benefit From the Microsoft Buyout?

Activision Blizzard's CEO has also been the topic of a lot of scrutiny in the past year after a Wall Street Journal story alleged that he was long aware of sexual harassment at his company and ignored it.

Kotick responded with a slate of respectable actions, announcing a detailed plan to make major changes at the company to make it a "more inclusive workplace" as well as reducing his base salary to the lowest possible amount ($62,500) and refusing both equity and bonuses. 

However, many eyes have fallen on his "golden parachute," a clause that states that if Kotick is fired without sufficient cause or quits, he'll be entitled to a payout of $14.4 million dollars. But it seems that estimation was nowhere near what the CEO could be paid for seeing the Microsoft deal through.

After a securities filing on April 29, we now know that Kotick's potential compensation  between the 4.3 million shares he already owns and the 2.2 million he is still entitled to acquire if he so wishes totals up to more than $500 million dollars (per the Microsoft offer, which was estimated when Activision stock was at $95 a share).

The securities filing also states that Kotick will not receive any additional equity from the Microsoft deal.

Kotick was one of the highest paid CEOs as of 2020, according to the Wall Street Journal's ranking of pay and performance from leaders of S&P 500 companies. In 2021 his total compensation was $826,549 as compared to the $154.6 million he made the year before.

The Microsoft acquisition is currently expected to close in spring of 2023.