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.”