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Activision Chalks Out an Impressive Package for CEO Kotick

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Per a SEC filing, Activision Blizzard, Inc.’s (ATVI - Free Report) new compensation package for its CEO Bobby Kotick includes a reduction in base pay to $1.8 million from $2.4 million currently but his performance related bonus will be 200% of his reduced base pay if he achieves “certain” targets. As per media reports, the number will top $56 million which will catapult Kotick into the league of the highest paid CEOs in the U.S.

Per The Wall Street Journal, Expedia’s (EXPE - Free Report) CEO Dara Khosrowshahi topped the list last year with $94.6 million in compensation while CBS Corp.’s (CBS - Free Report) Leslie Moonves with $56.8 million came in a distant second.

What’s Behind Kotick’s New Pay Package?

Activision has been doing very good in the past two years under Kotick. He, in fact, has been at the helm for 25 years now. In the past two years, Activision has been taking giant strides. Apart from a full-fledged video game publishing business, the company has been exploring newer avenues. In 2015, it announced acquisition of Ireland based King Digital Entertainment, which has made it a big player in the mobile games space where so far the company had a limited presence. Activision now boasts a user base of nearly half a billion.

E-sports is another area where Kotick is highly focused. In Jan 2016, the company acquired MLG, a leading e-sports player for an estimated $46 million. Founded in 2002, MLG is one of the biggest names in the e-sports arena. Activision has already established the Call of Duty World League.  Also, with Overwatch recording stupendous success with 20 million players and counting, the company has announced a league for this franchise as well. 

Moreover, Activision is attempting at becoming a broad-based media entertainment, on the lines of The Walt Disney Company (DIS - Free Report) , by leveraging its enviable IP. Last year, it established a movie studio and in June this year, the company released its first movie, World of Warcraft.

Activision’s efforts are well reflected in its quarterly results, Third-quarter 2016 revenues grew 59% year over year to $1.568 billion. Digital online revenues of $1.344 billion more than doubled year over year and contributed 86% to total revenue in the quarter.  The company currently has seven $1 billion franchises. In the last reported quarter, Activision earned $1 billion solely from in-game content sales. Strength in the Call of Duty title continues to benefit Activision.

Region wise, there has been massive improvement. Revenues from North America grew 61% to $796 million while that from Europe grew 36% to $499 million. Revenues from Asia Pacific more than doubled to $273 million.

At present, Activision carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Activision have registered impressive growth in the past two years. The stock generated a return of 77.53% compared with the Zacks Other Consumer Discretionary Industry gain of 19.69%.

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