EA shareholders criticize ‘exorbitant’ executive pay, slam ‘payoffs for layoffs’

    
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EA shareholders criticize ‘exorbitant’ executive pay, slam ‘payoffs for layoffs’

Over the course of June, we covered attempts by Activision-Blizzard shareholders to agitate against the company’s “Say-on-Pay” policy, which critics say effectively overpays CEO Bobby Kotick to the tune of $100M in options and equity over the last few years, more than equivalent CEOs and excessively more than other staff. Investor rep CtW Investment Group ultimately managed to convince 43.2% of shareholders to vote against the measure’s annual proposal – not enough to block it outright, but certainly enough to demonstrate serious dissent in the ranks.

Well, lest you think CtW Investment Group had it out for Acti-Blizz and Acti-Blizz alone, this week it sent ’round a press release indicating it’s gunning for EA’s overpaid execs next, as it’s now asking investors to vote against EA’s Say-On-Pay proposal at the August 6th shareholder meeting. CtW represents the pension funds that are “substantial” EA shareholders.

CtW Investment Group Calls For Shareholder Vote Against Electronic Arts Executive Pay

Exorbitant pay, duplicative equity awards for top executives, and ‘payoffs for layoffs’ amid hundreds of worker job losses the prior year

Washington, DC — CtW Investment Group today called on investors of the second-largest gaming company, Electronic Arts Inc. (NASDAQ: EA), to rebuke the company’s practice of awarding unjustified and excessive pay and equity to its top executives by voting against the ‘Say-On-Pay’ proposal, up for a vote at the annual meeting in August.

In a letter to shareholders, CtW Investment Group spotlight’s the company’s excessive executive pay practices, piling on exorbitant special equity awards to two executives – Blake Jorgensen (Chief Financial Officer) and Kenneth Moss (Chief Technology Officer) – and paying multimillion dollar bonuses amid worker layoffs last fiscal year. The investment group’s concerns include:

EA appears to be developing a ‘special award grant addiction’ that has led the company to grant two executives a second special multi-million dollar equity award before the performance period for a previous special award was even finished, on top of already high annual equity pay.

Recent equity award tranches have vested at low levels, raising suspicions that EA’s grant of two special awards to the two executives may be an attempt to replace unearned equity compensation, which undermines the spirit of pay-for-performance.

The special awards are further unjustified: EA’s claims of retention are dubious given that there is already one special retention award outstanding and that executives at the company generally, including the two that received the two special awards, are already well compensated through ordinary-course equity awards (particularly due to above-median equity grant benchmarking).

In fiscal year 2020, the two executives received not only these equity awards but also above-median bonuses while roughly 4% of EA’s total workforce — hundreds of workers — lost their jobs in fiscal year 2019. While EA executives voluntarily forfeited their bonuses in that fiscal year, the forfeiture was likely due to poor financial performance and not an acknowledgement or sacrifice because of the layoffs.

“Electronic Arts has loaded up its top executives, including two executives with two special awards each, while its workers faced massive layoffs last year. This is an undue focus on the short term that cannot be good for the long-term success of EA,” said Dieter Waizenegger, Executive Director of CtW Investment Group. “The notion that executives need to be incentivized with pay above-and-beyond the ordinary course program is a complete fallacy. EA’s executives have more than enough retention and performance incentive through their annual equity grant amounts, which the company already admits are set above the median of peers in its peer group. The EA board of directors need to hear from shareholders that they oppose this pay practice.”

Source: Press release

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Shibby523

Let’s be serious, these top guys most likely don’t have a single ounce of imagination and couldn’t create a successful game if their life depended on it. They leech off the success of their developers and the only contribution they give is to add MTX where ever possible. Their expertise lays in the ability to run a company and I believe it was 2k’s CEO (not sure if he’s still there) that had never even played a game.

Granted they most likely need these people but they are not really the ones that make the games successful.

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Bruno Brito

Waiting for the next “spiritual victory”.

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Schlag Sweetleaf

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WHATS FOR DESSERT.jpg
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Schmidt.Capela

Was it intentional to use a photo of Al Capone’s soup kitchen as the background? Adds a quite interesting hidden meaning to the image.

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Schlag Sweetleaf

Serendipity

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John Mclain

I’m a firm supporter of capitalism, but even I am starting to think there needs to be a federal law that establishes a pay cap/ceiling that noone can go above. Still a sizable amount, maybe a few hundred thousand a year, but making 10’s or 100’s of millions a year, should not be possible.

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Schmidt.Capela

One proposal Bernie Sanders recycled was to hike the taxes on companies where the CEO (or whoever the best paid executive is) earns more than 50x what the median worker earns; the added tax would range form +0.5% for companies where the CEO earns 50-100x what the median worker earns to +5% for companies where the CEO earns more than 500x what the median worker earns.

The beauty of this idea (which has been circulating in some way or another for at least a decade) is that it makes companies with a lower wage disparity more competitive, and creates an incentive for executives to boost regular worker pay to boot (as it would allow them to hike their own payouts without increasing the company’s tax bracket).

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bobfish

This confused me what it came up for Activision Blizzard, but now its happening for EA it made me realise there is more to this than meets the eye.

The reporting hasn’t been clear, or at least my understanding of the articles hasn’t, but CtW Investment Group is an activist group that works with unions and others for the betterment of employees. They aren’t investors themselves, rather they try to appeal to investors/shareholders to hold companies accountable for behavior which is considered unethical towards the majority of employees.

xpsync
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xpsync

People still pay for games? ffs epic free games, xbox pass for pc is like steam but everything is free, steam sales, i’m really curious to find where/how this will end up.

It is bothersome that vultures like Kotick, Wilson, whom have no idea what gaming culture and gaming is really about, but look like heroes while they rode the gravy train of people discovering that games are far superior form of entertainment, they did nothing to help the genre in anyway, they only came up with ways to better rip players off, and read Arktouros below, and now that.

Starting to show how little idea they have about games, how oblivious, and truly clued out they really are, and the peeps below you (the gamers/devs the only people who could have saved your assess) have no to negative respect for you as they might turn into your next pay bonus anyway, they are giving you the bird and throwing you f’s no rope, as the saying goes, party’s over.

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Bruno Brito

but look like heroes

What? Look, i don’t like gaming culture right now as much as the next guy, but if there is ONE thing Kotick is NOT seen as, is as a hero. He’s really hated.

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Arktouros

I mean this is the standard corporate model that businesses have been operating on for a long time now. Companies saw amazing growth potential via markets but that eventually demand caps out. There’s only so much of a product people will need (In this case we can only game so many hours in a day). The people who ran these companies saw huge bonuses and pay days for this kind of growth and they want to keep getting them. When demand dries up, the only where to look is internally and so the cuts start. By shaving away at your own company you keep the same amount of sales but now you do it on a leaner budget which ends up netting more over all profit. Bonuses keep getting paid.

So demanding that they stop the big payouts up top is fine and all, and stating they should keep the jobs of the people below is fine and all, but then the investors are also going to have to accept that those stupid record breaking profits they keep getting are going go backwards towards reasonable levels because there’s no additional market to be had.

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Adam Russell

According to the article this is not standard.

more than equivalent CEOs and excessively more than other staff.”

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Arktouros

Don’t we read similar articles/statements about Activision?

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Bryan Correll

I think we can allow for the possibility that executives from both Acti-Blizz and EA are overpaid.

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McGuffn

Just because one business is especially bad at a thing doesn’t mean it’s not standard.

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Dug From The Earth

While exorbitant executive pay absolutely must be done away with, in all industries, the fact that this movement is coming from the shareholders, the other group that receives exorbitant amounts of cash, is just pure irony… or hypocricy… or both.

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Adam Russell

How on earth do you think shareholders receive exorbitant cash? Dividends if they are given are minimal.
edit: afaict EA doesnt even pay a dividend.

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Dug From The Earth

yeah, my bad. My frame of mind was swapped when I was thinking this through, and I mixed up “Share holders” with “Investors”. In my line of work, we call investors “Stake holders”…. stake holder… share holders…. hence… the mix up.

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Chris Neal

I’d rather it come from someone that these companies will maybe listen to. Or have a better chance of listening to than the general public.

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agemyth 😩

All companies should seek approval from their own public subreddits and Twitter followers before making any big business decisions.