UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No.     )

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ACTIVISION BLIZZARD, INC.

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May 1, 2023

DEAR FELLOW SHAREHOLDERS:

For more than three decades, our people have been transforming the gaming industry through their creativity, curiosity, and commitment to excellence. In our quest to connect the world through epic entertainment, we’ve made our games accessible to the broadest audiences through mobile and free-to-play options, and helped players find joy, connection, and a sense of accomplishment through our games.

We are incredibly grateful to our talented and hardworking employees around the world for their vision and execution: Their efforts have delighted our players and generated outsized value for our shareholders for more than three decades.

Activision Blizzard’s total shareholder return (TSR) was 16% for 2022, well ahead of the S&P 500’s total decline of -18%. More importantly, during the 10 years ended December 31, 2022, Activision Blizzard delivered an annualized compound return of 23%, significantly ahead of the annualized compound return for the S&P 500 of 13%.

Over the 20 years ended December 31, 2022, Activision Blizzard delivered an annualized compound return of 21%, well ahead of the annualized compound return for the S&P 500 of 10%. During that same period, our market capitalization grew from under $1 billion to approximately $60 billion.

As a company that began when it was on the verge of insolvency, we’re gratified to have delivered such significant value creation to our shareholders by delivering consistently great games for hundreds of millions of players.

Proposed Microsoft Transaction

In January 2022, we entered into an agreement and plan of merger with Microsoft Corporation that reflects Microsoft’s agreement to acquire all outstanding shares of Activision Blizzard for $95 per share in cash⁽¹⁾. At the time we entered our merger agreement, this purchase price reflected a premium of approximately 45% over Activision Blizzard’s unaffected share price.

Shareholders overwhelmingly approved the proposed transaction with Microsoft at a special meeting in April 2022. The Board and our management team continue to believe this is the right transaction with the right partner at the right time, and we are engaged in ongoing discussions with regulators around the world as we work toward completion of the proposed transaction with Microsoft.

A combined Microsoft-Activision Blizzard will support our mission to deliver the world’s best interactive entertainment, benefiting players, employees, and shareholders, and enabling us to more successfully participate in an increasingly competitive industry. Our talented people will gain access to bigger audiences and more resources to continue connecting the world through epic entertainment.

Last week, the Competition and Markets Authority (CMA) in the United Kingdom issued a decision prohibiting our proposed transaction with Microsoft. While this was not the outcome we were hoping for, we believe the decision is fundamentally and deeply flawed. Microsoft has announced that it will appeal, a step we fully support.

Strong Governance and Transparency

Over the last year, even with the backdrop of the proposed transaction with Microsoft, we continued our commitment to an active dialogue with stakeholders. We offer proactive transparency and solicit regular stakeholder feedback to inform our decision-making.

As we continued our dialogue with shareholders throughout 2022, investors consistently shared their approval of the changes we implemented in our executive pay practices to ensure industry leading alignment of interests with our shareholders. We continue to focus on financial performance and measurable and relevant ESG objectives in our short-term incentive plan. We prioritized performance-based equity incentive awards and increased disclosure around executive pay decision-making for executives. In 2021, our CEO, Bobby Kotick, asked for and received a reduction in compensation to affirm our focus on workplace excellence and our goal of providing our industry’s most welcoming, inclusive culture.

Our continued success is tied to our ability to recruit, retain, and develop exceptional talent and to create opportunities for individuals from diverse backgrounds to enter and succeed in our industry. Driven by our determination to be a model for workplace excellence in gaming, in 2022 we advanced a number of key initiatives to ensure a supportive and diverse working environment.

Those initiatives, along with an unprecedented level of detail regarding our workplace data, will be shared in our first Transparency Report, a thorough and expansive look into Activision Blizzard’s workplace practices including workplace conduct, manager feedback, DE&I efforts, initiatives around veterans’ employment and sustainability, and more.

Here are some of the key takeaways we will discuss in further detail in that report, which we intend to release this quarter:

While the milestones and recognitions are meaningful validation of our teams’ dedication and hard work, we will always be focused on what more we can do to provide every single employee the best experience and working environment.

The games we have crafted over the past 32 years would not have been possible without a thriving culture of creativity, collaboration, and excellence.

This is a very exciting time for Activision Blizzard. Our mission to connect and engage the world through epic entertainment has never been more important. We will continue to deliver excellence with integrity for our employees, players, shareholders, and partners.

Sincerely,

Robert A. Kotick	Brian Kelly

MEETING INFORMATION
	WHEN Wednesday, June 21, 2023, 9:00 a.m., Pacific Time		WHERE Live audio webcast at: https://viewproxy.com/ATVI/2023

WAYS TO VOTE
	BY INTERNET www.proxyvote.com		BY TELEPHONE Call (800) 690-6903 or the number on your proxy card.		BY MAIL Sign, date, and return your proxy card.

NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of Activision Blizzard, Inc. will be held via live audio webcast, on Wednesday, June 21, 2023, at 9:00 a.m., Pacific Time.

To attend the meeting, visit https://viewproxy.com/ATVI/2023. Certain materials customarily made available at shareholder meetings (including the proxy materials and our shareholder list) will be available during the virtual meeting. Additional details regarding the logistics of the meeting can be found in the accompanying proxy statement, on the Investor Relations section of our website (https://investor.activision.com), and at https://materials.proxyvote.com/00507V.

Our Board of Directors (our “Board”) set April 25, 2023 as the record date for determining the shareholders entitled to receive notice of, and to vote at, the Annual Meeting.

We will be mailing to shareholders on or about May 1, 2023 a notice regarding the Internet availability of these proxy materials that contains instructions on how to access the proxy materials and vote shares electronically.

Shareholders are being asked to vote on the following matters at the 2023 annual meeting of shareholders.

Luci Altman
Corporate Secretary
May 1, 2023

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TABLE OF CONTENTS

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PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement for the 2023 annual meeting of shareholders of Activision Blizzard, Inc., a Delaware corporation (“Activision Blizzard” or the “Company”). This summary does not contain all the information that you should consider, and you should read the entire proxy statement before voting. For more complete information regarding the Company’s 2022 performance, please review our 2022 annual report, which is being provided to our shareholders at the same time as this proxy statement.

2022 PERFORMANCE – SETTING THE STAGE FOR FUTURE GROWTH

In 2022, Activision Blizzard’s expanded development teams delivered a broad slate of content across our established intellectual properties. Amid an uncertain macro environment, we expanded our intellectual properties across platforms, geographies, and business models, positioning the business for further growth. Our robust product pipeline, live game opportunity, and ongoing focus on operational discipline create a foundation for strong financial performance ahead. Key results for 2022 included:

We did not reach all the targets we set for ourselves in 2022; our full-year net revenues, operating income, and EPS ended below our 2021 results. Nonetheless, the Company returned to very strong year-over-year growth in the fourth quarter, with each of our business units breaking records, positioning the business for further growth in 2023. Key highlights from our business units included:

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EXECUTIVE COMPENSATION HIGHLIGHTS

Our executive compensation program is designed to motivate and reward exceptional performance, while holding executives accountable for driving future growth, which aligns executive performance and compensation with the interests of our shareholders. In addition to a strong focus on financial performance, particularly through the use of performance-based equity incentive awards, our executive compensation program includes environmental, social, and governance (“ESG”) objectives in our short-term incentive plan. We also provide meaningful disclosure around executive pay decision-making. A majority of the shareholders who voted at our 2022 annual meeting, representing approximately 88% of the total votes cast, voted in support of our say-on-pay proposal.

Compensation Aligns Pay with Performance

In recent years, the Company has continued to deliver financial success, including through launching free-to-play and mobile offerings in the multi-billion-dollar Call of Duty franchise, creating new experiences for World of Warcraft, and driving growth in in-game spending and advertising for Candy Crush. 

Although we performed well on our operating metrics for 2022, we did not reach all the financial targets that management established and our Board approved. As discussed in detail in the Compensation Discussion and Analysis section of this proxy statement, this performance was directly reflected in our executive compensation. For example, payouts under our annual incentive plan ranged from 86% to 94% of target for our named executive officers (other than Mr. Kotick, who received no payout), and the weighted average payout on our performance-based stock awards was 89% of target based in whole or in part on 2022 performance.

For a further discussion of how our 2022 performance impacted executive compensation, please see “Executive Compensation—Compensation Discussion and Analysis,” which begins on page 59 of this proxy statement.

Dramatically Reduced CEO Compensation

In October 2021, our founder and CEO, Mr. Kotick, asked that his compensation, excluding the value of benefits, be reduced to the lowest amount permitted to be paid to exempt employees under California law. More importantly, he requested that the Board tie any future changes in his salary to the achievement of the Transformational Goals (as defined below under “Corporate Governance Matters—Workplace and Culture—Actions to Enhance Our Workplace Experience”). Consequently, Mr. Kotick’s annual base salary was reduced effective as of October 28, 2021, and he did not receive any awards of equity incentive compensation or non-equity incentive compensation during 2021 or 2022.

We believe this decision signals to both employees and external stakeholders that the leader of the Company prioritizes these matters and treats them with the utmost seriousness. We believe the data in our 2022 Transparency Report, which we plan to publish in the second quarter of 2023 and is described below, and our achievement of workplace-related initiatives, as discussed in “Corporate Governance Matters—Workplace and Culture—Actions to Enhance Our Workplace Experience,” should be considered by stakeholders in evaluating executive and Company performance.

Specifically, our CEO received the following compensation for 2022:

Accordingly, our CEO’s total compensation for 2022 was $178,882, as reflected in the Summary Compensation Table on page 91 of this proxy statement.

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In addition, our CEO is not entitled to any special bonus or other special equity or non-equity incentive compensation as a result of entering into or closing the proposed transaction between Activision Blizzard and Microsoft Corporation (“Microsoft”) pursuant to the Microsoft Merger Agreement (such transaction, “the proposed transaction with Microsoft,” and such agreement, as defined below). Effective with the 2021 amendment to our CEO’s employment agreement, we eliminated the applicability of the “shareholder value creation incentive” to future long-term incentive awards (which created the potential for increased levels of vesting on certain performance-based awards if the Company achieved significant stock price appreciation) and of the “transformative transaction award” (which created the potential for an additional payment in the event of a transformative transaction). Upon closing the proposed transaction with Microsoft, our CEO would be entitled to receive the per share merger consideration in respect of his outstanding shares of our common stock, as would any other shareholder, his outstanding vested stock options would be cancelled and converted into the right to receive the per share merger consideration for each share of our common stock that would have been issuable upon exercise of such option immediately prior to closing, less the applicable option exercise price for each such share, and in the case of his involuntary termination without cause or termination by him with good reason, he would receive severance consistent with the terms of his employment agreement, the terms of which pre-dated the Microsoft Merger Agreement.

For a further discussion about Mr. Kotick’s compensation, please see “Executive Compensation—Compensation Discussion and Analysis,” which begins on page 59 of this proxy statement.

HOW WE ENSURE A WELCOMING, INCLUSIVE, AND DIVERSE WORKING ENVIRONMENT

We believe that a diverse, inclusive culture committed to excellence and measured by performance enables us to capitalize on the strengths of our workforce to exceed players’ and fans’ expectations and meet our business objectives. We remain committed to building and sustaining a welcoming, inclusive culture through Diversity, Equity, and Inclusion (“DE&I”) practices and programs throughout the employee experience. 

The Company regularly introduces new initiatives to enhance our culture and ensure a welcoming, inclusive, and diverse workplace committed to excellence. On October 28, 2021, Mr. Kotick announced transformational workplace excellence goals and practices. As part of our workplace excellence goals, we have accomplished the following:

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For further discussion of steps we have taken toward creating a model workplace, please see “Corporate Governance—Workplace and Culture,” which begins on page 44 of this proxy statement.

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OUR DIRECTOR NOMINEES

Set forth below is information about the nominees for election to our Board for a one-year term and until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation, or removal. Each nominee currently serves on the Board.

Name/ Principal Occupation		Age	Director Since	Independent	Committee Memberships
					Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee	Workplace Responsibility Committee
	Reveta Bowers Former Interim Head of School of the Center for Early Education	74	2018
	Kerry Carr Senior Vice President Global Performance Management, Revenue Growth Management and Shared Services of Bacardi	60	2022
	Robert Corti Retired CFO of Avon Products	73	2003
	Brian Kelly (Chairman) Chairman of the Board of Activision Blizzard	60	1995	—
	Robert Kotick CEO of Activision Blizzard	60	1991	—
	Barry Meyer Retired Chairman and CEO of Warner Bros. Entertainment	79	2014
	Robert Morgado (Lead Independent Director) Retired Chairman and CEO of Warner Music Group	80	1997
	Peter Nolan Senior Advisor to Leonard Green & Partners	64	2013
	Dawn Ostroff Former Chief Content and Advertising Business Officer of Spotify	63	2020
Member
Chairperson
Financial Expert

Lulu Meservey, who served as a director of the Company during part of 2022, is not a director nominee. In October 2022, Ms. Meservey resigned as a director and assumed a newly-created role as the Company’s Executive Vice President, Corporate Affairs and Chief Communications Officer.

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Summary of Director Nominee Experience, Skills, and Expertise

Below is a summary of some of the experience, skills, and expertise our Board believes are most relevant in light of the Company’s business and strategy. While these were among the attributes considered by the Board in connection with this year’s director nomination process, the following matrix does not encompass all experience, skills, expertise, qualifications or attributes of our director nominees.

For a further discussion about our director nominees, please see “Proposal 1—Election of Directors—Information About Our Director Nominees,” which begins on page 21 of this proxy statement.

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CORPORATE GOVERNANCE HIGHLIGHTS

We follow best practices in corporate governance—not just among our peer group, but in the market generally. Highlights of our corporate governance program are shown below.

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GENERAL

PURPOSE OF THIS PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation by our Board of proxies from holders of issued and outstanding shares of the Company’s common stock (“Common Stock”). The proxies being solicited will be used at the annual meeting of shareholders to be held via live audio webcast at https://viewproxy.com/ATVI/2023 on Wednesday, June 21, 2023, at 9:00 a.m., Pacific Time, and at any adjournment or postponement of the meeting (the “Annual Meeting”). All references in this proxy statement to “the Company,” “we,” “us,” “our,” and “Activision Blizzard” refer to Activision Blizzard, Inc.

FINANCIAL MEASURES USED IN THIS PROXY STATEMENT

Use of Non-GAAP Financial Measures

All financial measures used in this proxy statement are presented in accordance with generally accepted accounting principles (“GAAP”), unless explicitly identified as non-GAAP. Internally, as a supplement to our GAAP financial measures, management uses certain non-GAAP financial measures to assess our operating results, as well as for planning and forecasting. Management believes these measures help in comparing operating performance between periods and better understanding Activision Blizzard’s operating results by excluding certain items that may not be indicative of the Company’s core business, operating results, or future outlook. These non-GAAP measures are not intended to be considered in isolation from, as a substitute for, or as more important than financial information prepared and presented in accordance with GAAP. In addition, non-GAAP measures have limitations in that they do not reflect all of the items associated with the Company’s results of operations as determined in accordance with GAAP. In the future, Activision Blizzard may consider whether other significant non-recurring items should also be excluded in calculating the non-GAAP measures used by the Company.

Our non-GAAP measures are not based on a comprehensive set of accounting rules or principles, and such measures do not have a standardized meaning across companies. Therefore, other companies may use the same or similarly named measures, but exclude different items, which may not give investors an accurate way to compare Activision Blizzard’s performance to the performance of other companies.

Financial Metrics Used to Measure 2022 Compensation-Related Performance

Consistent with past years, the financial objectives used by management and our Compensation Committee to assess our employees’ 2022 performance were based on adjusted non-GAAP measures rather than the non-GAAP measures we use when reporting our financial results. Unlike our non-GAAP measures, adjusted non-GAAP measures exclude the impact of deferrals from our revenue accounting treatment on certain of our online-enabled products. Internally, management uses these adjusted non-GAAP measures in assessing our operating results, and they inform our planning and forecasting. Management believes this is appropriate because these adjusted non-GAAP measures enable management to analyze performance based on the timing of actual transactions with our customers and can provide a more timely indication of trends in our operating results. Since management and our Compensation Committee continue to believe these adjusted non-GAAP measures are an effective way to internally assess our operating performance, the Company expects to continue using them when defining compensation-related performance objectives in the future.

The Compensation Committee used the following adjusted non-GAAP measures to assess the 2022 performance of one or more of our named executive officers (our “named executive officers” or “NEOs”).

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Consistent with past years, at the time it established the measures to be used to assess 2022 financial performance for compensation purposes, the Compensation Committee reserved the discretion, when measuring performance, to exclude the impact of any extraordinary transaction (i.e., a non-recurring corporate transaction or legal expense matter that results in expenses exceeding $10 million for the year). For 2022, $87 million in legal and other related expenses were excluded from both AB Adjusted OI and AB Adjusted EPS and $50 million of related cash payments were excluded from AB Adjusted Free Cash Flow.

Further, when a financial measure is used to assess performance underlying a bonus opportunity under our Corporate Annual Incentive Plan (the “CAIP”) or an equity award the performance of which is determined by reference to an annual operating plan approved by our Board (such plan for any given year, the “AOP”) or long-range strategic plan, constant foreign exchange rates are assumed, which means we convert current period results into dollars using the average exchange rate at the time we established the targets (e.g., at the time the relevant AOP was established), rather than the actual exchange rates during the relevant period.

References to U.S. Dollars

All dollar amounts referred to in or contemplated by this proxy statement refer to United States (“U.S.”) dollars.

Cautionary Statement with Respect to Forward-Looking Statements

This proxy statement contains, or incorporates by reference, statements reflecting our views about our future performance that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements consist of any statement other than a recitation of historical facts and include, but are not limited to: (1) projections of revenues, expenses, income or loss, earnings or loss per share, cash flow, or other financial items; (2) statements of our plans and objectives, including those related to releases of products or services and to our workplace, diversity, and sustainability policies, plans, and commitments; (3) statements of future financial or operating performance, including the impact of tax items thereon; (4) expectations concerning vesting and satisfaction of performance conditions with respect to equity awards; (5) statements regarding the proposed transaction with Microsoft, including any statements regarding the expected timetable for completing the proposed transaction with Microsoft, the ability to complete the proposed transaction with Microsoft, and the expected benefits of the proposed transaction with Microsoft; and (6) statements of assumptions underlying such statements. Activision Blizzard generally uses words such as “outlook,” “forecast,” “will,” “could,” “should,” “would,” “to be,” “plan,” “aims,” “believes,” “may,” “might,” “expects,” “intends,” “seeks,” “anticipates,” “estimate,” “future,” “positioned,” “potential,” “project,” “remain,” “scheduled,” “set to,” “subject to,” “upcoming,” and the negative version of these words and other similar words and expressions to help identify forward-looking statements. Forward-looking statements are subject to business and economic risks, reflect management’s current expectations, estimates, and projections about our business, and are inherently uncertain and difficult to predict.

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We caution that a number of important factors, many of which are beyond our control, could cause our actual future results and other future circumstances to differ materially from those expressed in any forward-looking statements. Such factors include, but are not limited to: the risk that the proposed transaction with Microsoft may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; the failure to satisfy the conditions to the consummation of the proposed transaction with Microsoft, including the receipt of certain governmental and regulatory approvals (which may or may not be received on a timely basis or at all); the occurrence of any event, change, or other circumstance that could give rise to the termination of the Agreement and Plan of Merger, dated as of January 18, 2022, by and among Activision Blizzard, Microsoft, and Anchorage Merger Sub Inc., a wholly owned subsidiary of Microsoft (the “Microsoft Merger Agreement”); the effect of the announcement or pendency of the proposed transaction with Microsoft on our business relationships, operating results, and business generally; risks that the proposed transaction with Microsoft disrupts our current plans and operations and potential difficulties in employee retention and recruitment as a result of the proposed transaction with Microsoft; risks related to diverting management’s attention from ongoing business operations; the outcome of any legal proceedings that have been or may be instituted against us related to the Microsoft Merger Agreement or the transactions contemplated thereby; restrictions during the pendency of the proposed transaction with Microsoft that may impact our ability to pursue certain business opportunities or strategic transactions; uncertainty about current and future economic conditions and other adverse changes in general political conditions in any of the major countries in which we do business; decline in demand for our products and services if general economic conditions decline; fluctuations in currency exchange rates; our ability to deliver popular, high-quality content in a timely manner; negative impacts on our business resulting from concerns regarding our workplace, including associated legal proceedings; our ability to attract, retain, and motivate skilled personnel; future impacts from COVID-19; the level of demand for our games and products; our ability to meet customer expectations with respect to our brands, games, services, and/or business practices; competition; our reliance on a relatively small number of franchises for a significant portion of our revenues and profits; negative impacts from the results of collective bargaining, legal proceedings related to unionization, or campaigns by unions directed at our workforce; our ability to adapt to rapid technological change and allocate our resources accordingly; the increasing importance of digital sales and the risks of that business model; our ability to effectively manage the scope and complexity of our business, including risks related to our professional esports business model; our reliance on third-party platforms, which are also our competitors, for the distribution of products; our dependence on the success and availability of video game consoles manufactured by third parties and our ability to develop commercially successful products for these consoles; the increasing importance of free-to-play games and the risks of that business model; the risks and uncertainties of conducting business outside the U.S., including the need for regulatory approval to operate, the relatively weaker protection for our intellectual property rights, and the impact of cultural differences on consumer preferences; insolvency or business failure of any of our business partners; the importance of retail sales to our business and the risks of that business model; any difficulties in integrating acquired businesses or realizing the anticipated benefits of strategic transactions; seasonality in the sale of our products; fluctuation in our recurring business; the risk of distributors, retailers, development, and licensing partners or other third parties being unable to honor their commitments or otherwise putting our brand at risk; our reliance on tools and technologies owned by third parties; our use of open source software; risks associated with undisclosed content or features in our games; impact of objectionable consumer- or other third-party-created content on our operating results or reputation; outages, disruptions, or degradations in our services, products, and/or technological infrastructure; cybersecurity-related attacks, significant data breaches, fraudulent activity, or disruption of our information technology systems or networks; significant disruption during our live events; catastrophic events; climate change; provisions in our corporate documents and Delaware state law that could delay or prevent a change of control; other legal proceedings; increasing regulation in key territories over our business, products, and distribution; changes in government regulation relating to the Internet; our compliance with evolving data privacy laws and regulations; scrutiny regarding the appropriateness of the content in our games and our ability to receive target ratings for certain titles; changes in tax rates and/or tax laws and exposure to additional tax liabilities; changes in financial accounting standards or the application of existing or future standards as our business evolves; and the other factors included in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 (our “2022 10-K”), filed with the U.S. Securities and Exchange Commission (the “SEC”).

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PROPOSAL 1    ELECTION OF DIRECTORS

GENERAL

Our shareholders are being asked to re-elect nine incumbent directors at the Annual Meeting. Those elected will serve for a one-year term and until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation, or removal. Unless shareholders instruct otherwise, proxies solicited by this proxy statement will be voted for the election of all nine nominees. However, if any nominee becomes unable or unwilling to serve as a director at the Annual Meeting, the proxy may be voted for a substitute designated by our Board.

HOW WE IDENTIFY CANDIDATES FOR OUR BOARD

Nominating and Corporate Governance Committee Process

The Nominating and Corporate Governance Committee identifies and evaluates potential candidates to serve on our Board. The Committee may consider candidates suggested by its members, other directors, senior management, and, as described immediately below, our shareholders. In addition, the Nominating and Corporate Governance Committee may, at the Company’s expense, retain search firms, consultants, and other advisors to identify, screen, or evaluate candidates.

How Shareholders Can Recommend Director Candidates

Our shareholders may recommend independent director nominees directly to the Nominating and Corporate Governance Committee. Shareholders should submit their recommendations in writing and include the following information:

In addition, shareholders may submit nominees directly to our shareholders for election at an annual meeting. For more information, please see “Director Nominations and Other Shareholder Proposals for Our 2024 Annual Meeting” below.

Candidates recommended by shareholders are evaluated using the same criteria as are applied for all other candidates.

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Characteristics of Our Director Nominees

Experience, Skills, and Expertise

We believe an effective board of directors has members with a diverse set of perspectives, backgrounds, and experience that provide the collective skills, expertise, and independence necessary to promote independent oversight. As a company with a global customer base in the interactive entertainment industry, we consider leadership abilities gained from senior roles as executive officers or board members of large, global corporations in the media, entertainment, or technology fields to be particularly relevant to our business. Typically, the experience, skills and expertise we consider critical are the following:

Experience, Skills, and Expertise
	Gaming Industry		Education		Audit/Accounting
	Technology/Digital Industry		International Operations		Public Company Board
	Financial/Capital Allocation		Entertainment Industry		Public Company Executive

The Nominating and Corporate Governance Committee also considers the following attributes: personal and professional integrity; character; business judgment; time availability in light of other commitments; and independence. The Committee evaluates all nominees individually to ensure their experience, skills, and other attributes are consistent with the interests of our shareholders and complement our Board’s composition and needs.

Personal Diversity

The Nominating and Corporate Governance Committee also takes diversity into account and, to that end, has committed that the pool from which new independent director nominees are chosen will include qualified women and racially/ethnically diverse candidates. The following chart provides self-identified diversity information with respect to our director nominees.

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INFORMATION ABOUT OUR DIRECTOR NOMINEES

We believe all of our director nominees bring to our Board the practical wisdom and strong professional characteristics, judgment, and leadership abilities necessary to keep our Company performing competitively in the market. The following biographies of our director nominees describe their noteworthy experience, individual qualifications, and skills that we believe contribute, or will contribute, to our Board’s effectiveness and success.

REVETA BOWERS
Independent Former Interim Head of School of the Center for Early Education Director since: 2018 Committee(s): • Compensation • Workplace Responsibility Age: 74	Ms. Bowers has served as an independent governance and organizational consultant for nonprofit organizations since 2016. From 1972 to 2016, she served as a teacher and administrator at The Center for Early Education, an independent school for children, and she returned as Interim Head of School from 2020 to 2022. From 1993 to 2003, she served on the Board of Directors of The Walt Disney Company, a global entertainment company.
	Key Experience/Qualifications:	Other Affiliation(s):
	• Extensive public board experience, with ten years as an outside director of The Walt Disney Company and as a member of four committees of Disney’s board • Chair of Common Sense Media, a non-profit organization dedicated to helping children use technology responsibly, safely, and effectively (2016 - 2020; now Chair Emeritus) • Serves as an advocate for the use of gaming and technology to enhance childhood education	• California Partners Project, Gender Equity Advisory Council (member) • California Teacher Development Collaborative (seminar faculty member) • Edward E. Ford Foundation (member of Board of Advisors) • FEDCO Charitable Foundation (former member of Board of Directors) • L.A. Philharmonic (Vice Chair of Board of Directors) • Rossier School of Education, University of Southern California (former Chair of Board of Councilors) • Stepping Stones Fund of California Community Foundation (member of Advisory Board) • WorkingNation, Executive Committee (former member) Education: • B.A. in humanities from University of Southern California • M.A. in developmental psychology from College of Developmental Studies

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KERRY CARR
Independent Senior Vice President Global Performance Management, Revenue Growth Management and Shared Services of Bacardi Director since: 2022 Committee(s): • Audit Age: 60	Ms. Carr has held the role of Senior Vice President Global Performance Management, Revenue Growth Management and Shared Services at Bacardi Limited, a privately-held spirits company, and has served on the CEO’s Global Leadership Team since April 2021. Prior to that, she was Senior Vice President Global Performance Management from April 2020 to April 2021 and Global Senior Vice President—Continuous Improvement and Special Projects from 2014 until 2020. Ms. Carr held a number of positions in finance, operations, supply chain and organizational design before joining Bacardi, including serving as Executive Vice President, Chief Operating Officer, and Chief Financial Officer at Kid Brands, Inc. from 2012 to 2014 (Kid Brands, Inc. filed a voluntary petition for Chapter 11 bankruptcy in 2014); in positions of increasing responsibility in finance and operations at Avon Products, Inc. from 2003 to 2012; as Vice President of Internal Audit and Corporate Security at AT&T Inc. from 2001 to 2003; as Senior Vice President & Chief Financial Officer at ABC Television Stations and Radio Group from 1999 to 2001; as Vice President Worldwide Management Audit and International Labor Standards Compliance at The Walt Disney Company from 1996 to 1999; as Vice President of Internal Audit at Capital Cities/ABC, Inc. from 1991 to 1996; and in various financial management and audit roles at Deloitte & Touche from 1985 to 1991.
	Key Experience/Qualifications:	Other Affiliation(s):
	• Finance, operations, supply chain and organizational design expertise through, among others, her roles at Bacardi, The Walt Disney Company, and Avon Products • Experience leading global organizations in strategic business planning and driving and overseeing business performance, including in the entertainment and consumer products industries • Certified public accountant	• Junior Achievement (member of Board of Directors) • Literacy Volunteers of America (volunteer) • Sanctuary for Families Domestic Violence Agency (member of Board of Directors, Audit Committee and Development Committee) • Brooklyn Coalition Against Domestic Violence (member of Board of Directors) Education: • B.B.A. in public accounting from Hofstra University

ROBERT CORTI
Independent Retired Chief Financial Officer of Avon Products Director since: 2003 Committee(s): • Audit (Chair) • Nominating and Corporate Governance Age: 73	Mr. Corti worked at Avon Products, a global manufacturer and marketer of beauty and related products, for more than 25 years. He joined Avon Products as a tax associate in 1976 and held positions of increasing responsibility in the company’s finance department throughout his tenure there, including serving as Executive Vice President and Chief Financial Officer from 1998 until he retired from the Chief Financial Officer role in 2005 and from the Executive Vice President role in 2006.
	Key Experience/Qualifications:	Private Company Directorship(s):
	• Financial expertise, particularly accounting and tax experience, from his long tenure in Avon’s finance department • Unique perspective of having helped to guide a large public company with international operations through the changing economic and competitive landscape, gained from having served Avon for more than 25 years and working his way up to increasingly senior roles within that organization • Consumer products industry experience from his tenure at Avon • Certified public accountant	• Bacardi Limited (since 2006) Other Affiliation(s): • Manhattan Chapter of the Cystic Fibrosis Foundation (Co-Chair of Board of Directors) Education: • B.A. in accounting from Queens College • M.B.A. in taxation from St. John’s University

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BRIAN KELLY
Chairman of the Board of Activision Blizzard (since 2013) Director since: 1995 Age: 60	Mr. Kelly has been a director of the Company since 1995. He has served as Chairman of our Board of Directors since 2013, and previously served as the Co-Chairman of our Board from 1998 to 2013. Prior to that, he served in several executive roles for the Company, including as President from 1997 to 1998, as Chief Operating Officer from 1995 to 1998, as Chief Financial Officer from 1991 until 1997, and as Secretary from 1991 until 1997.
	Key Experience/Qualifications:	Other Affiliation(s):
	• Depth of institutional knowledge and understanding of our organization, by virtue of his service for over 20 years as a senior executive of the Company and as a director of the Company • Superior leadership skills, devotion to the Company, and commitment to helping to ensure our ongoing success	• Call of Duty Endowment (Co-Founder) • Juvenile Diabetes Cure Alliance (Founder and Chairman) • New York-Presbyterian Hospital (Trustee) Education: • B.A. in accounting from Rutgers University • J.D. from Fordham University School of Law

ROBERT KOTICK
Chief Executive Officer of Activision Blizzard Director since: 1991 Age: 60	Mr. Kotick, our founder and Chief Executive Officer, has been a director of Activision Blizzard since 1991, when he purchased a significant interest in the Company, which was then on the verge of insolvency. Mr. Kotick was our Chairman and Chief Executive Officer from 1991 until 2008, when he became our President and Chief Executive Officer. He served as President from 2008 until 2017.
	Key Experience/Qualifications:	Other Public Company Directorship(s):
	• Depth of institutional knowledge and understanding of our organization, as well as practical experience in a chief executive officer role, by virtue of his 30 years of service to the Company, including as our Chief Executive Officer and, previously, as our President and the Chairman of our Board • Perspective as a board member at a variety of other organizations and experience helping those organizations achieve their diverse goals and overcome a wide range of challenges through changing economic and social times	• The Coca-Cola Company (2012-2022) Other Affiliation(s): • Call of Duty Endowment (Co-Founder and Co-Chairman) • Los Angeles County Museum of Art (Vice Chairman of Board and Chairman of Committee of Trustees) • Harvard-Westlake School (member of Board of Trustees)

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BARRY MEYER
Independent Retired Chairman and Chief Executive Officer of Warner Bros. Entertainment Director since: 2014 Committee(s): • Nominating and Corporate Governance Age: 79	Mr. Meyer retired as the Chairman of Warner Bros. Entertainment Inc., an American producer of film, television, and music, at the end of 2013. He joined Warner Bros. as a director of business affairs in 1971 and held positions of increasing responsibility throughout his tenure there, eventually serving as Warner Bros.’ Chief Executive Officer and Chairman from 1999 until 2013. Mr. Meyer founded the consulting firm North Ten Mile Associates following his retirement from Warner Bros., and currently serves as the Manager and Co-Chief Executive Officer of that firm.
	Key Experience/Qualifications:	Other Affiliation(s):
	• Over 40 years of leadership and managerial experience in one of the largest entertainment production companies in the world, including serving as its chief executive officer • In-depth knowledge of both the business and creative aspects of the entertainment industry from his years at Warner Bros. and the leadership positions he holds in various cultural institutions dedicated to visual and cinematic arts • Wealth of experience in nearly every facet of the entertainment industry • Deep understanding of the unique challenges faced by large, multinational public companies	• Federal Reserve Bank of San Francisco (former Chairman) • Academy of Motion Picture Arts & Sciences (member) • Academy of Television Arts & Sciences (member and former Governor) • Hollywood Radio and Television Society (member) • Human Rights Watch (Director Emeritus) • Smithsonian National Museum of American History (former Vice Chairman of Advisory Board) • USC School of Cinematic Arts (former member of Board of Councilors) Education: • B.A. in English from the University of Rochester • J.D. from Case Western Reserve University School of Law

ROBERT MORGADO
Lead Independent Director Retired Chairman and Chief Executive Officer of Warner Music Group Director since: 1997 Committee(s): • Compensation (Chair) • Nominating and Corporate Governance (Chair) Age: 80	Mr. Morgado, our Lead Independent Director, is Chairman of Maroley Media Group, a media entertainment investment company he established in 1995. He previously served as Chairman and Chief Executive Officer of Warner Music Group, a music content company made up of recorded music and music publishing businesses, from 1985 to 1995.   Since joining our Board in 1997, Mr. Morgado has helped oversee the transformational growth of the Company. As the former Chairman and CEO of Warner Music Group and founder and Chairman of Maroley Media Group, Mr. Morgado brings extensive experience leading a variety of media and entertainment companies and offers important perspectives necessary to ensure the Company remains competitive in an increasingly expanding industry. In key leadership positions on our Board, and throughout his tenure, Mr. Morgado has relentlessly focused on shareholder value creation and operational excellence.
	Key Experience/Qualifications:	Private Company Directorship(s):
	• Extensive experience as a chief executive officer and a director at a variety of media and entertainment companies • Perspective as the founder and chair of a media entertainment investment company	• Kaanapali Kai (Chairman) (since 2006) • Nest Top (controlling shareholder of Nest Family and Nest Learning Systems) (since 1997) Other Affiliation(s): • Maui Arts & Cultural Center (Member of Board of Directors) Education: • B.A. in history and philosophy from Chaminade University of Honolulu • M.P.A. from The State University of New York

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PETER NOLAN
Independent Senior Advisor to Leonard Green & Partners Director since: 2013 (and from 2003 to 2008) Committee(s): • Audit Age: 64	Mr. Nolan has served as the Chairman of Nolan Capital, a private investment company, since 2014 and also is a senior advisor to Leonard Green & Partners, L.P., a private equity firm. He was previously the Managing Partner of Leonard Green & Partners. Before becoming Managing Partner at Leonard Green & Partners in 1997, Mr. Nolan served as a Managing Director and the Co-Head of Donaldson, Lufkin and Jenrette’s Los Angeles Investment Banking Division from 1990 to 1997, as a First Vice President in corporate finance at Drexel Burnham Lambert from 1986 to 1990, and as a Vice President at Prudential Securities, Inc. from 1982 to 1986. Prior to 1982, Mr. Nolan was an Associate at Manufacturers Hanover Trust Company.
	Key Experience/Qualifications:	Other Public Company Directorship(s):
	• Extensive experience in corporate finance and investment banking, including leadership roles at large international corporations with worldwide operations • Extensive and wide-ranging experience, demonstrated by directorships in other companies operating in various industries • Depth of institutional knowledge about the Company from his service on our Board	• AerSale Corporation (a company in which Leonard Green & Partners, L.P. has an ownership interest) (since 2020) Private Company Directorship(s): • Board member of companies in which Nolan Capital has a controlling ownership interest: – Coastal Farm Supply (since 2021) – Diamond Wipes International, Inc. (since 2016) – ExplorUS (since 2019) – Golden Road Food Services, LLC (since 2015) – Water Engineering, Inc. (since 2021) Education: • B.S. in agricultural economics and finance from Cornell University • M.B.A. from Cornell University

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DAWN OSTROFF
Independent Former Chief Content and Advertising Business Officer of Spotify Director since: 2020 Committee(s): • Compensation • Workplace Responsibility (Chair) Age: 63	Ms. Ostroff served as the Chief Content and Advertising Business Officer of Spotify Technology S.A., an international media services provider, from January 2020 to January 2023. She became Chief Content Officer in 2018 and became Chief Content and Advertising Business Officer in January 2020. Before joining Spotify, Ms. Ostroff co-founded Condé Nast Entertainment, a studio and distribution network for film, television, premium digital video, social media, and virtual reality, where she served as President from 2011 to 2018. Ms. Ostroff held a number of positions in the media and entertainment industry before founding Condé Nast Entertainment, including serving as President of Entertainment for The CW Television Network from 2006 to 2011; President of United Paramount Network from 2002 to 2006; Executive Vice President of Entertainment at Lifetime Television from 1999 to 2002; Senior Vice President of Programming and Production at Lifetime Television from 1996 to 1999; Division Senior Vice President, Creative Affairs of Twentieth Century Fox Film from 1993 to 1996; President of Michael Jacobs Productions at The Walt Disney Company from 1989 to 1993; and Vice President of Business Development at The Kushner-Locke Company from 1984 to 1989.
	Key Experience/Qualifications:	Other Public Company Directorship(s):
	• Wealth of experience in media, entertainment, and advertising, stemming from over 35 years at a variety of media and entertainment companies • Strong leadership skills, gained through numerous positions of responsibility throughout her career, including as an executive of an international media services provider and founder of a studio and distribution network	• Westfield Corporation (2016 to 2018) Private Company Directorship(s): • Anonymous Content (2019 to 2020) Other Affiliation(s): • New York University Faculty of Arts and Science (member of Board of Overseers) • The Paley Center for Media (member of Board of Governors) • Autograph (member of Advisory Board) Education: • B.S. in journalism from Florida International University

REQUIRED VOTE AND BOARD RECOMMENDATION

In accordance with our Bylaws, a director nominee will be elected in an uncontested election only if the number of shares voted “for” that nominee exceeds the number of shares voted “against” that nominee. For more information, see “Information About the 2023 Annual Meeting—What are my voting options with respect to each proposal and how many votes are required to approve each proposal” and “Corporate Governance Matters—Mandatory Offers to Resign from Our Board” below.

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CORPORATE GOVERNANCE MATTERS

OVERVIEW

Our Board is responsible for overseeing management and providing strategic guidance for the Company. Consequently, our Board strives to remain well-informed about the issues, risks, and opportunities facing the Company. Our Corporate Governance Principles and Policies, which are available from the Investor Relations section of our website, are designed to ensure the Board’s continued vitality and excellence. Our Board regularly reviews the specific elements of our corporate governance framework and updates them when doing so would be in the best interests of the Company and our shareholders.

BOARD LEADERSHIP STRUCTURE

Our Board believes it is appropriate to divide the roles of Chief Executive Officer and Chair of the Board. The primary responsibility of the Board is to oversee the affairs of the Company for the benefit of shareholders. Our Chief Executive Officer is responsible for the day-to-day management of the Company, while the Board is responsible for overseeing how the Chief Executive Officer performs that function. Having different individuals serve as the Chief Executive Officer and the Chair allows the Chief Executive Officer to focus on operational responsibilities and keeps a measure of independence between operating decisions and the Board’s oversight function. Separating these roles also is consistent with the division of our risk management oversight between management and our Board, as described below in “—Our Board’s Role in Risk Oversight.”

Our independent directors also have appointed a Lead Independent Director, whose duties include:

DIRECTOR INDEPENDENCE

Every year, our Board reviews and discusses all relevant information regarding each director’s relationships, transactions, or arrangements, as required by the rules for companies listed on The Nasdaq Stock Market (the “Nasdaq Rules”). This review includes current and prior relationships that each director or any of their family members has with the Company, our executive management, and our independent accounting firm. To help our Board make independence determinations, each director and director nominee completes a detailed annual questionnaire.

Based on information provided concerning our directors’ background, employment, and affiliations, our Board affirmatively determined that each of Messrs. Corti, Meyer, Morgado, and Nolan and Mses. Bowers, Carr, and Ostroff is an independent director within the meaning of the Nasdaq Rules. Specifically, our Board determined there are no relationships or activities between the Company and any of these directors that require further review by our Board or that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

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In determining that Ms. Ostroff is independent, the Board considered the Company’s relationship with Spotify, where Ms. Ostroff was the Chief Content and Advertising Business Officer until January 2023. The Company purchases advertising on Spotify’s platform. The Board determined that the relationship was not material and did not impair Ms. Ostroff’s independence, because (1) the revenues Spotify received from the Company were immaterial to either company (less than 0.01% of either company’s 2022 revenues); (2) the advertising sales were conducted in the ordinary course of business, on terms consistent with business done by Spotify with other companies; and (3) Ms. Ostroff has no special interest in the business done between Spotify and the Company.

BOARD EFFECTIVENESS

How the Board Oversees Our Business

Our Board and its committees are focused on effectively overseeing our business for the benefit of our shareholders.

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Annual Board, Committee, and Director Self-Evaluations

We recognize the critical role that Board and committee evaluations play in ensuring the effective functioning of our Board. Accordingly, the Chairman of our Board annually leads an evaluation of the Board’s performance to identify opportunities, if any, for improvement. These evaluations follow a process overseen by our Nominating and Corporate Governance Committee, as described below.

While this self-evaluation is done formally through the process discussed above on an annual basis, the Board and its committees evaluate their performance throughout the year in numerous one-on-one discussions between the Chairman or the Lead Independent Director and individual board members.

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OUR BOARD’S ROLE IN RISK OVERSIGHT

General Risk Oversight

Senior management is responsible for developing and implementing the Company’s financial and strategic plans, and identifying, evaluating, managing, and mitigating the risks inherent in those plans. Our Board is responsible for understanding and overseeing those plans, the associated risks, and the steps that senior management is taking to manage and mitigate risk. Our Board, its committees, and senior management exercise this risk oversight function in a variety of ways, as shown below.

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Cybersecurity Risk Oversight

Our Audit Committee oversees the identification and mitigation of potential cybersecurity risk, with the goals of protecting our intellectual property, maintaining consumer confidence, preserving employee data confidentiality, and minimizing information security threats to the Company and the users of our products and services. As part of this oversight, the Audit Committee receives updates at least quarterly from members of management with information security responsibilities with respect to the threats we face, and our risk mitigation plans to address those threats. These updates include results of information security maturity assessments and recommendations that are informed, in part, by third-party independent reviews of our information security control environment and operating effectiveness. As part of the Audit Committee’s oversight, the Chair also previously met with external cybersecurity risk experts to better understand the cybersecurity risk environment, leading board governance practices, strategic cyber reporting, and cyber resiliency.

Compensation Risk Management

The Compensation Committee, together with its independent compensation consultant, its legal counsel, and members of our Human Resources team, reviews the Company’s incentive compensation plans and practices annually to determine whether they encourage employees to take risks that are reasonably likely to have a material adverse effect on the Company. For 2022, as in previous years, this review consisted of an analysis of each of our incentive compensation programs for our executives and other employees, including eligibility, performance measures, payment targets and maximum payments, payment timing, and governance (including the applicable approval process). The Compensation Committee concluded that our compensation programs do not incentivize employees to take such risks. The Compensation Committee considered the requirements under the Microsoft Merger Agreement, which include a restriction on granting performance-based equity awards, and the Compensation Committee and its advisors determined that these also did not result in excessive risk-taking. Another notable item considered in the 2022 assessment was the tax impact mitigation actions for certain NEOs and the related agreements, as described in “Actions to Mitigate Potential Impact of Certain Tax Provisions and Related Use of Acceleration and Clawback Agreements” below, which the Compensation Committee and its advisors determined did not result in excessive risk-taking since the actions did not constitute any changes in plan design.

The Compensation Committee continually reviews the Company’s overall compensation structure and philosophy. As a result, we modified our approach to annual performance plan payouts for fiscal year 2021, specifically settling in 2022 a significant portion of amounts not yet paid as of December 31, 2021 in short-term vesting restricted share units (“RSUs”), primarily to enhance employee equity ownership and better align our employee equity compensation with industry practice. For fiscal year 2022, we continued this approach and settled in 2023 a portion of amounts not yet paid as of December 31, 2022 under our annual performance plans in short-term vesting RSUs as well, which the Compensation Committee and its advisors determined did not result in excessive risk-taking since the actions did not constitute any changes in plan design.

The incentive compensation plans for our employees are designed to encourage achievement of challenging targets aligned with shareholder interests and our overall corporate strategy. These plans provide upside opportunity for higher levels of performance, while the following features help mitigate risk:

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We also follow a number of governance policies that mitigate compensation-related risks, including:

For more information, see “Executive Compensation—Compensation Discussion and Analysis—How We Make Decisions About Executive Compensation—Compensation Policies That Mitigate Risk.”

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EXECUTIVE SUCCESSION PLANNING

Our Board’s goals are to have a process for effective executive development and succession and to be prepared for both the unexpected loss of a key leader and planned changes to our management team. As a part of various sessions during the year, our Board focuses on human capital, including by engaging in succession planning for our chief executive officer and our other most senior officers. In these sessions, among other things, our Board has:

BOARD MEETINGS

Our Board generally meets at least quarterly, as well as in conjunction with the annual meeting of shareholders. Our Board had 13 meetings during 2022. All incumbent directors who served on our Board during 2022 attended at least 90% of the aggregate of (1) the total number of meetings held by the Board during the time they served, and (2) the total number of meetings held by each committee on which they served during the time they served.

All directors are expected to attend annual meetings of our shareholders. All ten directors who were then serving on the Board attended the 2022 annual meeting.

The independent directors meet in executive session outside the presence of management at least twice each year. Two such executive sessions took place during 2022.

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BOARD COMMITTEES

Standing Committees

Our Board has three standing committees—the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee—each of which operates under a written charter approved by our Board. The charters for each of the three standing committees are available on our website at http://investor.activision.com/corporate-governance.cfm. From time to time, our Board also forms special or ad hoc committees, typically to address discrete issues. For example, in 2021, the Board formed the Workplace Responsibility Committee, which is described below.

Set forth below is a summary of the purpose and key responsibilities of the four Board committees. Each current committee member served in the role shown below through 2022 and continues to serve in that role.

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Please see “Executive Compensation—Compensation Discussion and Analysis—How We Make Decisions About Executive Compensation—Key Participants in the Executive Compensation Decision-Making Process” below and “—Our Board’s Role in Risk Oversight—Compensation Risk Management” above for a further description of our Board’s responsibilities relating to compensation paid to our directors and executive officers and to overseeing the Company’s employee compensation policies, programs, agreements, and arrangements generally.

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The Workplace Responsibility Committee is an ad hoc committee formed in November 2021 by our Board. Its duration is at the discretion of the Board and will be reviewed annually.

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DIRECTOR ORIENTATION AND CONTINUING EDUCATION

Board Orientation

New directors receive a director orientation manual that provides them with important information about the Company, our Board, and the general roles and responsibilities of directors of publicly traded companies. Each new director also is invited to attend an “onboarding day,” during which they meet with our executives and other key members of senior management.

Continuing Education

We recognize the benefit of continuing education for our directors. Our executives and other key members of senior management routinely speak at Board and committee meetings on topics impacting the Company, including emerging risks, industry trends, technological developments, economic forecasts, and competitive challenges. In addition, we may engage third parties to provide in-boardroom education. We also encourage our directors to attend external educational programs and provide financial and administrative support for that purpose.

LIMITS ON OTHER DIRECTORSHIPS

Directors must obtain the approval of the Nominating and Corporate Governance Committee before accepting a board membership at another publicly held company. No director may serve on the boards of more than four other publicly held companies. In addition, no director who serves on our Audit Committee may serve on the audit committees of more than two other public companies, unless our Board determines that the simultaneous service would not impair the ability of the director to effectively serve on our Audit Committee.

MANDATORY OFFERS TO RESIGN FROM OUR BOARD

Directors Who Fail to Receive a Majority of “For” Votes

A director nominee will be elected in an uncontested election only if the number of shares voted “for” that nominee exceeds the number of shares voted “against” that nominee, in each case by the holders of shares present in person or by proxy at the meeting and entitled to vote on the election of directors. If an incumbent director is not re-elected, Delaware law and our Bylaws provide that the director continues to serve on our Board as a “holdover director” (i.e., until a successor has been duly elected and qualified, or until the director’s earlier death, resignation, or removal). However, our Corporate Governance Principles and Policies require a director who fails to receive the required number of votes for re-election to offer to resign from our Board.

In such an instance, our Board or, at the Board’s discretion, the Nominating and Corporate Governance Committee, without the participation of the holdover director, will consider whether the continued service of the director offering to resign is appropriate, based on any factors it deems relevant (e.g., the underlying reasons for the “against” votes, the director’s length of service and qualifications, the director’s contributions to our Company, and the director’s skills and characteristics). If our Board or the Nominating and Corporate Governance Committee, as the case may be, determines that the director continues to contribute significantly to the Company, the holdover director’s membership on our Board may continue.

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Directors Who Change Their Professional Role

An independent director who retires, changes employment, or otherwise has a significant change in professional role or responsibilities that may reasonably be seen to affect the director’s ability to serve must offer to resign from our Board. Similarly, unless our Board or the Nominating and Corporate Governance Committee determines otherwise, or the director has an agreement with us to the contrary, if a director who is employed by Activision Blizzard retires, resigns, or otherwise has a significant change in professional role or responsibilities, that director must offer to resign from our Board.

In any such instance, our Board or, at our Board’s discretion, the Nominating and Corporate Governance Committee, without the participation of the director offering to resign, will consider whether the continued service of such director is appropriate in light of such professional change. If our Board or the Nominating and Corporate Governance Committee, as the case may be, determines that the director continues to contribute significantly to the Company, the director’s membership on our Board may continue.

 

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At these meetings, which for the most part continued to be conducted virtually for the safety and convenience of all participants, the parties discussed our workplace disclosures and policies; corporate governance and human capital management oversight (including the work of the Workplace Responsibility Committee); the impact of the proposed transaction with Microsoft on our workplace initiatives; product safety; executive compensation; Board succession; and ESG matters more broadly. Shareholders also provided details of their voting policies and votes from our 2022 annual meeting.

The following chart reflects the percentage of meetings at which key topics were discussed:

 

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Engagement on Workplace Excellence Commitments

Following our 2022 annual meeting, our corporate governance team, at the direction of our Board, conducted extensive shareholder outreach in order to ensure that our reporting includes the information our shareholders feel is most useful to evaluate our workplace excellence commitments. The topic of workplace disclosures and policies was discussed in approximately 88% of our ESG engagement meetings, and in more than half of our ESG engagement meetings, we received specific shareholder feedback communicating their preferences for disclosures in response to the non-binding shareholder proposal that was approved at our 2022 annual meeting.

The following chart reflects the preferences expressed by shareholders for key types of working environment disclosures:

 

This extensive feedback was quantified and reported to the Nominating and Corporate Governance Committee of our Board, and our Lead Independent Director shared this with the full Board. This feedback further informed the content of our 2022 Transparency Report, which we plan to publish in the second quarter of 2023. Shareholder feedback continues to be instrumental in shaping our decisions and priorities relating to our human capital management initiatives, corporate governance, executive compensation, and ESG disclosures.

As a result of this ongoing feedback process over the past several years, we have implemented changes that we believe are simultaneously responsive to shareholder concerns and appropriate for the Company. We expect to continue to incorporate such feedback into our decision-making processes.

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GOVERNANCE DOCUMENTS

Many of our corporate governance documents, including our Corporate Governance Principles and Policies, charters for our Board’s standing committees, Code of Conduct, and “clawback” policy (i.e., Policy on Recoupment of Performance-Based Compensation Related to Certain Financial Restatements), can be found on our website at http://investor.activision.com/corporate-governance.cfm. Please see “Helpful Resources” on the inside back cover of this proxy statement for more information.

Corporate Governance Principles and Policies

Our Corporate Governance Principles and Policies establish a framework for the Board’s exercise of its duties and responsibilities in service of the best interests of the Company and our shareholders. They address, among other things, the role of our Board, the composition of our Board and that of its standing committees, meetings of the Board and its committees, and director stock ownership requirements.

Code of Conduct

We have a code of ethics—our Code of Conduct—that was refreshed in 2022 and applies to all of our directors, executives, and other employees worldwide. Our Code of Conduct is the ethical foundation for everything we do at Activision Blizzard and outlines our expectations for all of our people. It affirms our values of responsibility, creativity, and integrity, and it is the basis for how we treat each other and our community. The members of our Board and all employees are required to review and acknowledge our Code of Conduct on an annual basis. We will post any amendments to, or waivers of, the Code of Conduct that apply to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, or any person performing similar functions, and any other related information, on our website. Our Chief Compliance Officer administers our ethics & compliance program.

Forum Selection Bylaws

On January 17, 2022, in connection with entering into the Microsoft Merger Agreement, we amended our Bylaws to implement a forum selection provision stating that, unless the Company consents in writing to the selection of an alternative forum, the sole and exclusive forum for certain legal actions involving the Company will be the Court of Chancery of the State of Delaware. If the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, the forum for any such action will be another state or federal court located within the State of Delaware or, if no court of the State of Delaware has jurisdiction, the United States District Court for the District of Delaware. The provision further provides that U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. Forum selection provisions are commonly adopted so duplicative shareholder lawsuits cannot be filed in multiple forums, which can be costly to the Company and produce inconsistent results, while at the same time ensuring there is an appropriate court available in which shareholders may pursue claims.

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HOW TO COMMUNICATE WITH OUR BOARD

We believe that communication with our shareholders is very important. All feedback sent to us from any shareholder, no matter the size of their holdings, is reviewed. Our Corporate Secretary reviews all communications addressed to our Board, any of its committees, or one or more individual directors. Generally, communications that are advertising materials, promotions of a product or service, employment solicitations, or patently offensive will not be forwarded. Communications that relate to our accounting practices, internal accounting controls, or auditing matters will be forwarded promptly to the Chair of the Audit Committee. Communications that relate to any other matter that our Corporate Secretary considers appropriate will be forwarded promptly to the addressee(s).

By Mail	Email	Phone
mail to Activision Blizzard, Inc. c/o Corporate Secretary 2701 Olympic Boulevard, Building B, Santa Monica, California 90404	send email to ir@activision.com	Investor Relations (310) 255-2000

OUR EXECUTIVE OFFICERS

Biographical summaries for our executive officers can be found in Item 1 of our 2022 10-K. Biographical information about Mr. Kotick can also be found under “Proposal 1—Election of Directors” above.

POLITICAL ACTIVITIES

Activision Blizzard does not make direct political contributions to individual candidates, parties, committees, or IRS Section 527 entities or to influence the outcome of campaigns or ballot measures, nor do we directly pay for any independent expenditure or electioneering communication (as those are defined by law). Activision Blizzard also does not make payments to 501(c)(4) tax-exempt organizations that the recipient may use for political purposes, and we do not have a political action committee. If we decide, on an exception basis and with the prior approval of our Chief Executive Officer, to make a direct political contribution, we will disclose that contribution in our ESG report.

Pursuant to our Code of Conduct, our resources may not be used for employees’ personal political activities, and lobbying activities are permitted only in compliance with applicable law and by individuals designated to represent the Company in such capacity.

Activision Blizzard engages with government officials and policymakers at the federal, state, and local levels on legislation, regulations, and policies that affect our business and operations. We also occasionally retain outside consultants to support our engagement with government officials and policymakers. Activision Blizzard complies with all federal, state and local lobbying regulations that require entities and individuals who engage in public policy advocacy to register and disclose relevant expenditures.

We belong to several trade associations, including the Entertainment Software Association (the “ESA”) in the United States. These bodies have taken stances on legislative matters and engaged in lobbying on issues affecting the video game industry. Trade associations are independent organizations representing a variety of members; we may not share their political or policy positions. The Company’s membership and participation in these associations is reported annually to the Nominating and Corporate Governance Committee.

According to the ESA, during the ESA’s 2022 fiscal year, $41,229 of the Company’s membership dues were used for political contributions or expenditure and $674,973 of the Company’s membership dues were used for Section 162 lobbying expenses. No other dues paid by the Company to any other United States trade association or similar tax-exempt organization that received at least $25,000 in dues from us during 2022 were used for

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political contributions or expenditures. No portion of the Company’s membership dues were used for payments to tax-exempt organizations, such as 501(c)(4)s, that the recipient may use for political purposes.

You can find more information about how Activision Blizzard participates in public debate in the U.S. through direct and indirect advocacy by accessing the Political Activities Disclosures on our website at http://investor.activision.com/corporate-governance.cfm.

WORKPLACE AND CULTURE

Talent is the lifeblood of our business. We are fortunate to have what we believe is one of the most talented employee workforces in our industry. Growing our developer base remains one of our strategic priorities. We added hundreds of talented professionals in 2022, growing our game development teams by 25% year-over-year. We must attract and retain the best talent in order to deliver on our mission to connect and engage the world through epic entertainment, and we are deeply committed to ensuring that Activision Blizzard is a place where everyone feels safe, heard, included, and empowered. We have made significant investments and substantial changes with the goal of creating the most welcoming and inclusive workplace in the industry.

Actions to Enhance Our Workplace Experience

The Company regularly introduces new initiatives to enhance our culture and ensure a welcoming, inclusive, and diverse workplace committed to excellence. Continuing to provide a model workplace in our industry remains one of our highest priorities.

On October 28, 2021, Mr. Kotick announced transformational workplace excellence goals and practices (collectively, the “Transformational Goals”). As part of our workplace excellence goals, we have accomplished important workplace milestones, including the following:

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In connection with the announcement of the Transformational Goals, in October 2021, Mr. Kotick requested that his compensation be reduced to the lowest amount permitted to be paid to exempt employees under California law. Consistent with this request, Mr. Kotick’s base salary for 2022 was $62,500 and he did not receive any equity awards or bonus payments.

We believe this decision signals to both employees and external stakeholders that the leader of the Company prioritizes these matters and treats them with the utmost seriousness.

Our Board’s Workplace Responsibility Committee, formed in November 2021, monitors the Company’s workplace excellence policies, procedures, and commitments. The Workplace Responsibility Committee requires management to develop and achieve key performance indicators or other means to ensure accountability for workplace goals and initiatives.

For further discussion of steps we have taken in 2022 toward creating a model workplace, please see “—Enhanced Transparency Regarding Our Workforce” and “—Additional Initiatives to Ensure a Welcoming, Inclusive, and Diverse Working Environment” below.

Comprehensive Agreement With the Equal Employment Opportunity Commission (“EEOC”)

In September 2021, after a thorough investigation and as part of the Title VII conciliation process, Activision Blizzard and the EEOC agreed to resolve certain claims through a consent decree, with no admission of liability. The consent decree was approved by the United States District Court in March 2022 and created an US$18 million fund to satisfy any claims from eligible participants through a claims process administered by the EEOC. A federal court ruled that this settlement was adequate, fair, and reasonable and that approving the consent decree advanced the public interest. The EEOC agreed that we would donate excess, undistributed funds to charitable organizations focused on advancing women in the video game and technology industries or promoting awareness around gender equality issues, or to support our diversity and inclusion efforts.

A third-party claims administrator oversaw the claims administration process and a thorough process for claimants was provided. As part of our agreement with the EEOC, an internal Equal Employment Opportunity coordinator was hired, and the Company engaged a third-party consultant to provide ongoing, independent oversight and ensure compliance with the consent decree terms. The independent consultant’s periodic reports called for by the consent decree are made directly to the EEOC.

This independent process has provided more than 15,000 current and former colleagues an opportunity to confidentially share their workplace experiences with the EEOC. The claims administrator has already settled claims and sent funds to those current and former employees the EEOC determined were eligible to participate in the settlement fund and who have agreed to the settlement offered to them. We have been notified by the EEOC that, after distributing funds for all eligible claims, there will be unused funds from the settlement. We have suggested to the EEOC that, pursuant to the consent decree, these excess funds be donated to Reboot Representation, which is helping close the gap for Black, Latina, and Native American women in technology industries.

Enhanced Transparency Regarding Our Workforce

Transparency on Pay Equity

In response to employee requests for further transparency, the Company shared the results of our U.S. Pay Equity Review for 2020 and Global Pay Equity Reviews for 2021 and 2022. Our U.S. Pay Equity Review for 2020 showed that U.S.-based women at the Company earned slightly more on average than men for comparable work in 2020, after accounting for factors that impact pay like role, location, tenure, and job

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classification. (Specifically, U.S.-based women received approximately US$1.01 for every US$1.00 received by men.) Our Global Pay Equity Reviews for 2021 and 2022 showed that globally, in both years, employees at the Company who did not identify as men earned US$1.00 for every US$1.00 received by those who did identify as men, on average. We also conducted a median pay gap analysis for 2021 and 2022.

Transparency on Our Employee Diversity

Beginning in 2022, we have disclosed periodic updates to our Representation Data, which quantifies our progress toward our goal of increasing the percentage of women and non-binary employees by 50% over five years. Additionally, in May 2022, we published our consolidated 2021 EEO-1 report alongside our 2021 ESG Report. And on March 23 2023, we released our first annual DE&I Look-Back, which details how our Company is prioritizing its commitment to diversity, equity, and inclusion, and provides additional data on diverse representation within our employee population, including hiring and retention statistics broken down by gender, race, and ethnicity.

Transparency on Our Workplace Excellence Commitments

We plan to publish, in the second quarter of 2023, our 2022 Transparency Report, which will include detailed information about our workplace, including detailed data about our efforts to prevent misconduct, harassment, and discrimination, and to foster a culture of diversity, equity, and inclusion. We believe this report will validate that we have always made a safe workplace a priority and demonstrate that we foster a culture of diversity, equity, and inclusion. Our Board considered the extensive feedback we received throughout our ESG engagement outreach following last year’s annual meeting of shareholders. For a discussion of the feedback received during this process, please see “Shareholder Engagement Update,” which begins on page 38 of this proxy statement.

Additional Initiatives to Ensure a Welcoming, Inclusive, and Diverse Working Environment

We are continuously working to provide our employees the most welcoming and inclusive workplace in our industry. In addition to the Transformational Goals described above, we took the following additional steps in 2022 to further enhance our workplace:

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We are committed to making additional investments and continuous improvements to our workplace. Where we can, while respecting privacy and other limitations, we expect to share more information with our employees and shareholders as to the outcome of our efforts relating to our working environment.

Unionization

Our employees in the U.S. are not covered by collective bargaining agreements. However, in May 2022, a small group of quality assurance workers at our Raven Software studio in Wisconsin voted in favor of forming a union with the Communication Workers of America (the “CWA”). In December 2022, a small group of quality assurance workers for Blizzard in New York also voted in favor of forming a union with the CWA. On December 27, 2022, our Proletariat studio in Boston, which was recently acquired by Blizzard, announced the formation of a union and the CWA filed a petition for union representation with the U.S. National Labor Relations Board (the “NLRB”). The NLRB announced that the mail ballot election would be scheduled to begin January 24, 2023, but the CWA withdrew its petition on January 24, 2023. We deeply respect the rights of all employees to make their own decisions about whether or not to join a union and exercise all other National Labor Relations Act rights. Across the Company, we believe that a direct relationship between managers and team members allows us to quickly respond and deliver the strongest results and the greatest opportunities and incentives for employees. Pursuant to the Microsoft Merger Agreement, we are also subject to certain interim covenants with respect to various matters (including, among other things, with respect to collective bargaining agreements and employee benefit plans) concerning the operation of our business during the pendency of the proposed transaction with Microsoft.

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ENVIRONMENTAL, SOCIAL, AND GOVERNANCE HIGHLIGHTS

Our Board and its Nominating and Corporate Governance Committee oversee matters related to our ESG practices, performance, and disclosure and provide management with feedback and guidance on the Company’s ESG efforts. Our management has established an ESG Steering Committee, which is currently chaired by our Chief Administrative Officer and includes several other senior leaders. We also established task-specific cross-functional, enterprise-wide ESG working groups, which include members of our executive management team and employees from across our business units and corporate functions. These working groups support the steering committee by identifying the ESG matters that are most relevant to our business. As part of our long-term strategy, we will continue to expand our internal ESG expertise and advance our reporting activities.

Our ESG efforts in 2022 remained focused on three key areas: championing our people, advancing diverse and inclusive communities, and protecting the planet.

Championing Our People

Our goal is to create epic entertainment, and we know that depends on epic talent. We are committed to becoming the most welcoming, inclusive company in our industry so we can continue to attract and retain the very best talent.

Developing Our Diverse Talent

We see diversity and inclusion as foundational to our games, policies, and workforce, so we have embedded DE&I practices and programs in the full employee lifecycle to enhance our ability to attract, recruit, enable, retain, and develop diverse world-class talent. As part of our $250 million commitment to accelerate opportunities for diverse talent over the next decade, we launched Level Up U to prepare non-industry professionals to become full-time game developers.

Since 2016, the number of women in Activision Blizzard game development leadership roles has more than quadrupled. We saw the most progress between 2021 and 2022, when the percentage of women in game development leadership roles increased by 58%.

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Competitive Pay and Benefits

We believe in linking compensation to overall Company and business unit/franchise performance and each individual’s contribution to those results. The emphasis on overall Company performance is intended to align our employees’ financial interests with the interests of our shareholders. We are committed to providing comprehensive benefit options including benefits that allow our employees and their families to live healthier and more secure lives. We frequently upgrade our benefits portfolio by seeking out pioneer partners that can give our employees modern benefit experiences.

Our Diverse Talent Pipeline

Our overall goal in hiring is to provide an objective and equitable process that helps us recruit the very best creative and technical talent in the world. To meet that goal, we have identified an array of resources to promote and sustain diversity throughout our workforce. Beyond being an equal opportunity employer, we are committed to building and sustaining a culture of DE&I, beginning with the tone set by management and extending throughout the organization.

Our Employee Network Groups

Our ten global Employee Network Groups (“ENGs”) sit at the heart of our organization and provide safe spaces for connection, growth, learning, and leadership. They also create opportunities for cultural awareness, professional development, networking, community involvement, and player connections. In 2022, we refreshed our ENGs’ network governance and operating model to improve efficiency and increase participation and membership across the Company. We now have over 4,000 members across our ENGs. We encourage participation and continue to expand opportunities for involvement, including through the creation of new ENGs and by inviting existing groups to evolve or rebrand to best reflect their identities. The hard work of many employees who have joined or otherwise engaged with one of our ten employee network groups is an important force behind our Company’s DE&I progress. Our networks foster a sense of belonging and provide a space for employees to engage, educate, and show up to work as their authentic selves.

In 2022, our ENGs had opportunities to:

More information about our ENGs is available in our latest ESG Report.

Advancing Diverse and Inclusive Communities

We have prioritized and taken meaningful action on a broad portfolio of initiatives, including expanding opportunities in the gaming and technology space for diverse talent through mentorship, education, and career access programs.

We launched our Inclusive Game Design (“IGD”) program to ensure a world-class standard for game inclusion and accessibility. IGD is focused on ensuring the widest possible audience can enjoy our games, by encouraging characters and narratives that are both diverse and welcoming, while promoting positive gaming community interactions. In 2022, over 100 game developers were certified as Accessible Player Experience (“APX”) Practitioners through AbleGamers. Equipping our game developers with new capabilities has led to more intentional and precise ways to deliver diverse and accessible games.

Our In-Game Communities

Given the nearly 400 million global players who engage with our games for an average of over an hour per day when they play, we recognize our responsibility to create a safe gaming environment for all players. While the task is complex and requires constant vigilance, we take additional steps each year to further reduce inappropriate behaviors such as cheating, disruptive conduct, hate speech, discrimination, and harassment of every kind in our gaming communities. We believe our continued efforts result in year-over-year improvements.

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Communities in Which We Live and Work

From Company-sponsored programs to grassroots voluntary involvement, our employees love to give back and support programs and charities that are meaningful to them and our communities more broadly.

Call of Duty Endowment

The flagship of our corporate social responsibility efforts is the Call of Duty Endowment (the “Endowment”), which helps veterans find high-quality careers by supporting groups that prepare them for the job market and by raising awareness of the value that veterans bring to the workforce.

Since its inception in 2009, the Endowment has made more than $72 million in grants and last year hit its long-term goal of getting 100,000 veterans back to work—two years ahead of our 2024 goal. The Endowment’s next goal is to place 150,000 veterans by 2027.

Despite a challenging job market in 2022, the Endowment had another successful year, with almost 16,000 veterans placed in high-quality jobs. We are proud that 19% of those veterans were women and 21% were Black, even though those who identify as women and Black compose just 10% and 13%, respectively, of the U.S. veteran community.

Please see the Endowment’s most recent annual report, which may be viewed at https://www.callofdutyendowment.org, for more information.

Giving Back to the Community

There are a number of ways Activision Blizzard empowers its employees to support their communities. For example, on our Veterans Day of Service, more than 1,000 Activision Blizzard employees volunteer during the workday, helping charities focused on creating a positive impact for veterans across the globe. Additionally, in December 2021, the Company launched ABK Gives Back, a program that matches eligible employee contributions, dollar-for-dollar, up to $1,000 (or local equivalent) annually. In 2022, ABK Gives Back supported 5,294 charities in 73 countries. Activision Blizzard also supports various community programs that promote STEAM learning and foster career opportunities for diverse talent in STEAM fields.

In 2022, we invested $250 million in money market funds selected for their support of diverse and inclusive communities. A large portion of the investment manager fees associated with these funds is reallocated to minority-led, women-owned, or disabled-veteran-owned firms that use the earned profits to generate positive impacts in their underserved communities. As of December 31, 2022, our combined $1.50 billion of outstanding diversity financial impact investments represents 12% of our aggregate cash, cash equivalents, and short-term investments.

To further support bringing diverse talent into the gaming and tech industries, we made a $2 million donation to Reboot Representation, an organization working to double the number of Black, Latina, and Native American women receiving computing degrees by 2025.

Additionally, in 2022, we made impact grants addressing needs such as relief for Ukraine refugees and fleeing Afghani students.

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PROTECTING THE PLANET

We are committed to doing our part to protect the planet for current and future generations. That is why we think about our environmental impact across our operations, both directly and throughout our value chain. We are actively working to identify and address opportunities to decarbonize the way we work, partner, produce, and market games.

Converting to a more digital business enables us to set and achieve important sustainability goals. Through this transition, we reduced our packaging waste by 70%, compared to a 2019 baseline, and surpassed our original goal of a 50% reduction by 2024.

Please see our latest ESG Report for additional information about our environmental sustainability progress.

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DIRECTOR COMPENSATION

OVERVIEW OF OUR DIRECTOR COMPENSATION PROGRAM

Our non-employee directors receive a mix of cash and equity awards, with most of the compensation in the form of equity. The amount of compensation varies with each director’s role and responsibilities. Mr. Kotick, our Chief Executive Officer and the only employee director, does not receive any additional compensation for his service on our Board.

The Compensation Committee annually reviews the total compensation paid to our non-employee directors and each element of our director compensation program and makes recommendations to our Board regarding the program as needed. In doing so, our Compensation Committee considers various factors, including our directors’ responsibilities, their experience and skills, and whether the form and amount of our director compensation is competitive as compared to the peer group against which the Compensation Committee benchmarks our executive compensation. (Please see “Executive Compensation—Compensation Discussion and Analysis—How We Make Decisions About Executive Compensation—How We Use Peer Company Data and Compensation Surveys” below for information about our peer group.) The Compensation Committee engages Exequity, an independent compensation consultant, to assist in this review. Our executive officers may assist the Compensation Committee in obtaining benchmarking and other information relevant to determining director compensation, but management has no role in recommending or determining the amount or form of director compensation.

Although the structure of the director compensation program and the amounts payable thereunder are reviewed annually, the annual cash retainer and the value of the equity granted to our non-employee directors have remained unchanged for almost ten years.

The director compensation program was most recently amended as of November 22, 2021, to provide for compensation for service on our then-new Workplace Responsibility Committee.

CASH COMPENSATION

The following table summarizes the cash elements of our non-employee director compensation program. Directors do not receive any additional payments for attending Board or committee meetings.

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EQUITY COMPENSATION

Our Board believes that directors more effectively represent our shareholders if they are shareholders themselves. Each non-employee director is entitled, upon election or appointment to our Board and upon each subsequent re-election, to receive RSUs representing the right to receive shares of our Common Stock. The grant date fair value of those RSUs is $250,000. The value of the grant to any director who is elected or appointed to our Board at any time other than at the annual meeting of shareholders will be pro-rated based on the amount of time from the date of such election or appointment until the then-expected date of our next annual meeting of shareholders. The actual number of shares underlying any such grant of RSUs is determined by dividing the grant date fair value of the award by the closing price of our Common Stock on The Nasdaq Stock Market on the date of grant. Each award vests in four equal installments, on a quarterly basis during the year following the grant date, subject to continued service on our Board.

On January 18, 2022, we announced that we had entered into the Microsoft Merger Agreement. For details regarding the impact that the closing of the proposed transaction with Microsoft would have on the unvested equity awards then held by our non-employee directors, please see the Definitive Proxy Statement on Schedule 14A filed with the SEC on March 21, 2022 (the “Merger Proxy Statement”).

STOCK OWNERSHIP GUIDELINES

Non-employee directors are expected, within four years following their initial election to our Board, to beneficially own shares of our Common Stock (including any RSUs representing the right to receive shares of our Common Stock) having an aggregate value at least equal to five times the amount of the annual cash retainer we then pay directors for regular service on our Board. Currently, this equates to beneficially owning shares of our Common Stock with a value of $450,000. The value of shares owned by each non-employee director is calculated as of January 2 of each year (or, if that date is not a trading date, the next trading date), based on the higher of: (a) the closing price of our Common Stock on The Nasdaq Stock Market on that day; and (b) the closing price of our Common Stock on The Nasdaq Stock Market on the date of grant (or, if that date is not a trading date, the next trading date), for any shares we awarded the director, and the actual cost to the director for any other shares (including shares acquired upon exercise of a stock option). As of January 3, 2023, each non-employee director who, as of that date, had been a member of our Board for four or more years was in compliance with these guidelines.

INDEMNIFICATION

We maintain a directors and officers insurance policy that covers all our directors with respect to claims arising out of an alleged wrongful act by them in their capacity as directors of Activision Blizzard. Further, our Certificate of Incorporation and our Bylaws require us to indemnify our directors and officers to the fullest extent permitted by the Delaware General Corporation Law.

In addition, we have entered into indemnification agreements with certain of our non-employee directors that require us, among other things, to indemnify those directors against certain liabilities that may arise by reason of their status or service as directors, provided they acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the Company’s best interests (and, with respect to any criminal action, suit, or proceeding, provided they had no reasonable cause to believe their conduct was unlawful). The indemnification agreements also require us to advance expenses incurred by our non-employee directors as a result of any proceeding against them as to which they could be indemnified.

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REIMBURSEMENT OF EXPENSES AND LIMITED BENEFITS

We reimburse our directors for expenses incurred in connection with their service on our Board. We also reimburse our directors’ spouses for travel, lodging, and related expenses they incur in attending business-related meetings or events at our request, though such occurrences are uncommon. Our Board may provide our directors with other benefits. For example, on rare occasions, if a director’s spouse joins a business trip other than at our request, that person may receive travel and lodging at our expense when the incremental cost is negligible.

DIRECTOR COMPENSATION FOR 2022

The following table summarizes information regarding the compensation of our directors for 2022, other than Mr. Kotick. The compensation Mr. Kotick received as an employee of the Company is included in the “Summary Compensation Table” that follows the Compensation Discussion and Analysis section below, and he does not receive any additional compensation for his Board service. Messrs. Hartong and Wasserman served as directors of the Company during 2022 until the Annual Meeting of Shareholders on June 21, 2022. Ms. Meservey served as a director of the Company from April 16, 2022 until her resignation effective October 6, 2022, which occurred because she assumed a newly-created role as the Company’s Executive Vice President, Corporate Affairs and Chief Communications Officer.

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PROPOSAL 2    ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION

GENERAL

In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our shareholders have an opportunity to cast a non-binding, advisory vote (commonly known as a “say-on-pay”) on the compensation of the NEOs in the “Summary Compensation Table” that follows the Compensation Discussion and Analysis section below.

We are asking our shareholders to approve the following resolution at the Annual Meeting:

“Resolved, that the shareholders APPROVE, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Company’s 2023 proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion.”

Before you cast your vote, we encourage you to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes our executive compensation policies and practices, including a number of important changes made to them. You should also review the Summary Compensation Table and other compensation tables and related narrative discussions and pay versus performance disclosure, which provide detailed information on the compensation of our NEOs. Our Compensation Committee and Board believe our compensation policies and practices align with shareholder interests by emphasizing pay for performance and enabling us to attract, retain, and motivate the key executive talent necessary to achieve our financial and strategic goals.

REQUIRED VOTE AND BOARD RECOMMENDATION

This proposal will be approved if it receives the affirmative vote of the holders of a majority of the voting power of the shares present in person or by proxy and entitled to vote on the matter at the Annual Meeting. As an advisory vote, the proposal is non-binding on the Company, our Board, and our Compensation Committee. However, our Board and its Compensation Committee value the opinions expressed by our shareholders and will carefully consider the outcome of the vote when making future executive compensation decisions. Our Board ultimately has a duty to act in what it believes to be the best interests of the Company and all of our shareholders.

The Board has adopted a policy of providing for annual say-on-pay advisory votes. As such, we expect that the next say-on-pay vote will be held at our 2024 annual meeting (unless the proposed transaction with Microsoft closes before we would otherwise convene that meeting, in which case the meeting will not occur).

Shareholders also have an opportunity at the Annual Meeting to cast a non-binding, advisory vote on the frequency of future say-on-pay votes pursuant to proposal 3 below.

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COMPENSATION COMMITTEE LETTER

Dear Fellow Shareholders,

Last year, we announced that we had entered into the Microsoft Merger Agreement with Microsoft Corporation. We continue to believe the proposed transaction with Microsoft is the ideal opportunity for us to further connect and engage the world through epic entertainment.

In 2022, amid an uncertain macroeconomic environment, we focused on expanding key intellectual properties across platforms, geographies, and business models, to position the business for further growth. While 2022 financial performance was below the levels achieved in 2021, we closed the year with strong year-over-year growth in the fourth quarter, with each of our business units breaking records. From a workplace perspective, we increased our representation of women and non-binary employees to 26%, up from 24% as of November 30, 2021; we added hundreds of talented development professionals to our teams; and we increased transparency around pay equity, workforce diversity, and our numerous efforts to enhance our culture.

2022 Pay for Performance Alignment

The Compensation Committee has been focused upon ensuring strong pay for performance alignment, with incentive compensation payouts directly tied to financial performance and shareholder value creation. Given our lower-than-expected financial performance in 2022, payouts under our incentive plans generally resulted in below target payouts. Specifically, our NEOs, other than our CEO, each received an annual bonus payout for 2022 between 86% and 94% of target, and our NEOs’ performance-based restricted share units, which were settled in early 2023, resulted in a weighted average delivery of 89% of the shares that would have been delivered at target.

Shareholder Engagement and Recent Enhancements to our Compensation Programs

In recent years, we made significant changes to our CEO compensation in response to shareholder feedback. We continued our dialogue with shareholders since implementing these changes and since the 2022 annual meeting, we reached out to shareholders representing 65% of our outstanding shares and met with 35 institutions representing 32% of our outstanding shares. Many of our investors approved of these enhancements in our executive pay practices, particularly the substantial reductions to our CEO’s compensation and elimination of certain provisions in his employment agreement. In addition, in our NEOs’ annual bonus plan, we maintained the 80% weighting of financial performance and increased disclosure around the ESG-based strategic objectives. These adjustments exemplified our responsiveness to our shareholders’ concerns.

Further, to reinforce his commitment to our Transformational Goals, our CEO, Mr. Kotick, requested to reduce his total compensation to the annualized minimum salary requirement mandated under California law (which was approximately $62,500 for 2022) and waived eligibility for incentive programs as of October 2021 and he has not received an annual bonus or equity award since the 2020 performance year. This arrangement has been in effect since October 2021 and will remain in effect until the Workplace Responsibility Committee determines the Company has made appropriate progress toward the Transformational Goals.

Impact of the Proposed Transaction with Microsoft on 2022 Compensation

Consistent with the covenants of the Microsoft Merger Agreement, the Compensation Committee adjusted its pay approach for our NEOs and took a series of actions in consideration of the closing of the proposed transaction with Microsoft. While we are committed to performance-based long-term incentives, we were restricted from awarding performance-based equity awards under the Microsoft Merger Agreement. As a result, annual equity awards were granted to our NEOs in the form of time-vesting RSUs. Although these awards were not permitted to be performance-based under the Microsoft Merger Agreement, each of our continuing NEOs, other than our CEO, who voluntarily waived his incentive eligibility, have outstanding equity awards which will be measured against performance in 2023 and beyond. The Compensation Committee believes these actions were in the best interests of our shareholders and ensured retention of our NEOs during a pivotal time for Activision Blizzard.

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We believe the above changes to our executive compensation program illustrate not only our continuing commitment to responding to the input of our shareholders, but also our focus on ensuring our players continue to have the very best games and on maintaining the best workplace for our colleagues.

We are truly excited by the future prospects for Activision Blizzard and remain committed to ensuring we follow the best practices in both compensation and governance.

Sincerely,

Your Compensation Committee

Robert Morgado (Chair), Reveta Bowers, and Dawn Ostroff

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) describes the compensation program for the named executive officers (“NEOs”) introduced below. As previously announced, Mr. Alegre left the Company for an external opportunity upon completion of his three-year term of employment under his agreement with the Company on March 31, 2023.

Name		Position with Activision Blizzard
	Robert Kotick	Chief Executive Officer
	Armin Zerza	Chief Financial Officer
	Daniel Alegre	President and Chief Operating Officer
	Brian Bulatao	Chief Administrative Officer
	Grant Dixton	Chief Legal Officer

This CD&A includes a description of the material elements of our compensation and the rationale for our compensation decisions. In particular, we:

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EXECUTIVE SUMMARY

Long-Term Company Performance

Under the leadership and strategic vision of our founder and long-time CEO, Mr. Kotick, Activision Blizzard has consistently navigated the dynamics of our constantly evolving industry to harness growth opportunities and create exceptional value for our shareholders.

The Company has created substantial value for our shareholders over the long term, outperforming both our peer group median and the S&P 500 over 10 and 20 years. Over the 10 years ended December 31, 2022, we delivered an average annual total shareholder return (“TSR”) of 23%, ahead of the peer group median of 18% and significantly ahead of the average annual TSR for the S&P 500 of 13%. Over the 20 years ended December 31, 2022, the Company’s average annual TSR was 21%, ahead of the peer group median of 11% and significantly ahead of the average annual TSR for the S&P 500 of 10%.

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Total Shareholder Returns

We believe this long-term sustained performance reflects the Company’s track record of disciplined capital allocation, focus on our largest opportunities, operational excellence, and our commitment to hiring and retaining top talent. This, coupled with our robust pay-for-performance mindset, demonstrates our ability to further enhance the Company’s earnings profile. These have been core tenets for Mr. Kotick and his leadership team for 30 years.

Our Corporate Strategy

Our long-term performance continues to be enabled by our evolving strategy, which is focused on expanding reach, engagement, and player investment for our portfolio of fully-owned intellectual properties as we execute against four key strategic growth initiatives:

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2022 Performance

In 2022, Activision Blizzard’s expanded development teams delivered a broad slate of content across our established intellectual properties. Amid an uncertain macro environment, we expanded our intellectual properties across platforms, geographies and business models, positioning the business for further growth. Our robust product pipeline, live game opportunity, and ongoing focus on operational discipline create a foundation for strong financial performance ahead.

Key results for 2022 included:

We did not reach all the targets we set for ourselves in 2022; our full year net revenues, operating income and EPS ended below our FY 2021 results. Nonetheless, the Company returned to very strong year-over-year growth in the fourth quarter, with each of our business units breaking records, positioning the business for further growth in 2023. Key highlights from our business units included:

In addition, with respect to each NEO’s 2022 objective for a targeted representation level of women and non-binary employees, we also increased our representation for those who identify as women or non-binary people to 26% globally versus 24% a year earlier. Please see “—Workplace and Culture” for more details on our workplace accomplishments.

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2022 Pay-for-Performance Alignment

The performance targets for our 2022 incentive plans were aligned with our Annual Operating Plan (i.e., our AOP), and we regarded these goals as ambitious, but achievable. We also made it more difficult than many of our peers do for executives to earn a payout. For example, in our annual bonus plan (the CAIP), the threshold payout is set at 90% achievement of our AOP, whereas, for a number of our peer companies, the minimum achievement level required for any payout is 85% or less.

Given our lower-than-expected financial performance in 2022, payouts under our incentive plans generally resulted in below target payouts. As discussed in detail in this CD&A, this performance was directly reflected in our NEO compensation as follows:

RESPONSIVENESS TO SHAREHOLDER FEEDBACK AND COMPENSATION PROGRAM HIGHLIGHTS

How the Board Addresses Shareholder Feedback About our Compensation Program

The Compensation Committee considers shareholder input essential and continues to focus on integrating shareholder viewpoints into our executive compensation program. We regularly engage with our shareholders throughout the year as part of this ongoing effort. In response to investor feedback in recent years, we implemented a series of enhancements that ensure our compensation programs are aligned with our shareholders’ interests. As a result of these enhancements, the focus of shareholder comments and questions has largely shifted away from executive compensation to other topics.

Following our 2022 annual meeting, we continued our focus on shareholder outreach and extended invitations to engage with us to shareholders owning approximately 65% of our outstanding shares, including each of our 50 largest institutional shareholders. We also scheduled meetings as requested with shareholders outside of our top 50 shareholders. Ultimately, we met with 35 institutions owning approximately 32% of our outstanding shares. The topic of executive compensation was raised by shareholders in only a small percentage of meetings, and shareholder feedback regarding our pay program was largely positive. This feedback primarily related to shareholder preferences for pay program disclosure and the inclusion of ESG metrics in executive pay. Investor feedback from these meetings was shared with our Board. For further discussion of our shareholder engagement program, please see “Shareholder Engagement Update,” which begins on page 38 of this proxy statement.

The below section provides a summary of our current positioning on key topics that we have discussed with our shareholders during our engagements, as well as adjustments we and our CEO viewed as necessary to further enhance our executive compensation practices and to incentivize achievement of the Transformational Goals.

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Compensation Program Highlights

Value of CEO Compensation:

Pay for Performance Alignment:

Compensation Program Disclosure:

We believe our current executive compensation programs and disclosure are aligned with shareholder interests. A majority of the shareholders who voted at our 2022 annual meeting, representing approximately 88% of the total votes cast, voted in support of our say-on-pay proposal.

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In addition to the topics raised by shareholders and actions taken by management, the following chart illustrates additional features of our compensation programs:

What We Do			What We Don’t Do
PAY FOR EXCEPTIONAL PERFORMANCE
	Compensation mix designed to reward executives for actions that create sustainable shareholder value			No guaranteed salary increases or bonuses
	Metrics underpinning performance incentives align with our strategic and financial objectives			No repricing of stock options without shareholder approval
	Annual and multi-year performance periods ensure focus on short- and long-term performance			No dividends paid on unearned awards
	Significant majority of equity granted to our executives is performance-based, specifically as PSUs that vest based on performance against preset goals
	Emphasis on multi-year growth metrics ensures continuous focus on driving incremental shareholder value
ALIGNMENT OF SHAREHOLDER AND EXECUTIVE INTERESTS
	Stock ownership guidelines (including CEO requirement of 50x base salary) encourage ownership mentality			No excise tax gross-up on payments following a change in control termination
	“Clawback” policy enables recoupment of certain performance-based compensation (both cash and equity) from an executive in the event of an earnings restatement due to that executive’s misconduct
COMPENSATION RISK MITIGATION
	Formal risk management, governance, and review structures, including at least two levels of approval for incentive award payouts			No hedging of Company stock, or using margin accounts to trade Company stock
	Formal caps on our incentive programs (both cash and equity) prevent outsized payments			No pledging of Company stock by directors, NEOs and other Section 16 officers, or the President of any of Activision Publishing, Blizzard, or King as collateral for any type of loan
	Careful management of shareholders’ equity, with dilution in the bottom quartile of our peers over the last three years

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COMPENSATION PROGRAM

We offer competitive total compensation to attract, retain, and motivate key executives who have the characteristics needed to operate in our industry most effectively. Annual and long-term incentive awards are linked to the Company’s financial performance and stock price, incentivizing executives to drive corporate performance. In addition, our executive officers are rewarded based on the extent to which they achieve the predetermined strategic objectives our Compensation Committee sets for each of them. This approach is designed to hold our executive officers accountable for our performance and thereby align their interests with those of our shareholders.

The following table illustrates certain elements of our executive compensation program, with a focus on the performance-based incentives we use or have used.⁽¹⁾⁽²⁾

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COMPENSATION ARRANGEMENTS IN CONNECTION WITH PROPOSED TRANSACTION WITH MICROSOFT

As previously disclosed, we announced on January 18, 2022 that we had entered into the Microsoft Merger Agreement. As a result of and in accordance with the Microsoft Merger Agreement, the Company implemented a series of actions aimed at ensuring retention of our employees, including certain NEOs. The Company believes these actions are in the best interests of our shareholders, and they were approved by our shareholders on an advisory basis at the April 28, 2022 special shareholder meeting held to vote on merger-related proposals.

Enhanced Severance Plan

Pursuant to the terms of the Microsoft Merger Agreement, the Compensation Committee in November 2022 approved and adopted the Activision Blizzard, Inc. Enhanced Severance Plan (“Enhanced Severance Plan”), which covered certain executives and certain other employees of the Company, but no NEOs. The Compensation Committee in December 2022 approved certain of the Company’s NEOs, namely Messrs. Zerza, Bulatao and Dixton (the “Covered NEOs”), also to be covered under the Enhanced Severance Plan. The Enhanced Severance Plan provides the Covered NEOs and certain other employees of the Company with the following severance benefits in the event their employment is terminated by Microsoft, the Company or their respective subsidiaries and affiliates without “cause” or by the covered employee for “good reason” (as such terms are defined in the Enhanced Severance Plan, as agreed between Microsoft and the Company), in either case, within 18 months after closing of the proposed transaction with Microsoft: (1) the greater of (a) two times the sum of the covered employee’s base salary and target annual cash incentive bonus (excluding any milestone or special bonus payments) and (b) the severance payable under the covered employee’s employment agreement, if any; (2) a pro-rated target annual cash incentive bonus payment based on the percentage of the year completed as of the termination date; and (3) cash payments for COBRA premiums for twenty-four (24) months. Receipt of these benefits is subject to the covered employee’s execution of the Company’s customary release of claims. See “—Potential Payments Upon Termination or Change of Control” below for a description of the severance payable under the NEOs’ employment agreements.

Covered employees who are not entitled to the benefits described above would be entitled to the following severance benefits under the Enhanced Severance Plan in the event of such terminations of employment: (1) the greater of (a) the sum of such other covered employee’s base salary and target annual cash incentive bonus (excluding any milestone or special bonus payments) and (b) the severance payable under such other covered employee’s employment agreement (if any); (2) a pro-rated target annual cash incentive bonus payment based on the percentage of the year completed as of the termination date; and (3) cash payments for COBRA premiums for twelve (12) months.

For details regarding the impact the closing of the proposed transaction with Microsoft would have on the unvested equity awards then held by our NEOs and any amounts otherwise payable to them, please see the Merger Proxy Statement and the “—Potential Payments Upon Termination or Change of Control” section below .

Actions to Mitigate Potential Impact of Certain Tax Provisions and Related Use of Acceleration and Clawback Agreements

Accelerated Vesting and Payments of Certain Awards and Other Compensation

If the proposed transaction with Microsoft closes, certain of our employees (including certain NEOs and other executives) may become entitled to payments and benefits that may be treated as “excess parachute payments” within the meaning of Section 280G of the Code (“Section 280G”). To mitigate the potential impact of Section 280G and Section 4999 of the Code on the Company and the Covered NEOs, the Compensation Committee, on December 18, 2022, approved the acceleration into December 2022 of the vesting and payments of certain equity awards, cash-based awards, and other compensation, as applicable, that otherwise would have been payable to the Covered NEOs in connection with or prior to closing of the proposed transaction with Microsoft, as described further below,

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subject to execution by each of the Covered NEOs of an Acceleration and Clawback Agreement. These actions are intended to benefit the Company by preserving compensation-related corporate income tax deductions for the Company that otherwise might be disallowed through the operation of Section 280G, and to mitigate or eliminate the amount of excise tax that may be payable by the Covered NEOs pursuant to Section 4999 of the Code.

In approving the accelerated vesting and payments of awards and other compensation, the Compensation Committee considered, among other things, the projected value of the compensation-related corporate income tax deductions that otherwise might be lost as a result of the effect of Section 280G and the benefits to the Company of reducing the potential tax burden on the Covered NEOs.

The approved accelerated vesting and payments took one or more of the following forms, to the extent applicable to each Covered NEO:

The Accelerated CAIP Payout, Accelerated Salary, Accelerated RSUs, Accelerated PSUs and Accelerated Severance (collectively, the “Accelerated Amounts”), as applicable, offset the corresponding payments or amounts the Covered NEO otherwise would have been entitled to receive upon closing of the proposed transaction with Microsoft or otherwise in 2023, thereby precluding duplication of payments. All Accelerated Amounts were reduced by applicable tax withholdings and are subject to the terms of the Acceleration and Clawback Agreement, as described below.

Specifically, the Compensation Committee approved for each Covered NEO the following accelerated vesting and payments:

The above accelerated vestings and payments were approved to mitigate the potential impact of Section 280G and Section 4999 of the Code on an as-needed basis. No accelerated vesting or payments were made to Mr. Kotick or Mr. Alegre in 2022.

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Acceleration and Clawback Agreements

In connection with the accelerated vesting and payments described above, each Covered NEO signed an Acceleration and Clawback Agreement providing that his Accelerated Amounts would be subject to certain repayment and true-up conditions, as described below.

Termination for “cause” or voluntary resignation other than for “good reason.” If a Covered NEO’s employment with the Company is terminated for “cause” or voluntarily by the Covered NEO other than for “good reason” (as such terms are defined in the Enhanced Severance Plan, as agreed between Microsoft and the Company) before the proposed transaction with Microsoft closes and prior to the date on which the applicable payment would have been made in the ordinary course but for the payment of the relevant Accelerated Amount, and such termination otherwise would result in forfeiture of any portion of the Accelerated Amounts, then the Covered NEO would be required to repay to the Company either the (1) applicable number of shares of Common Stock or (2) cash value equivalent underlying Accelerated RSUs and Accelerated PSUs and the applicable cash amounts underlying the Accelerated CAIP Payout, Accelerated Salary and Accelerated Severance that would have been so forfeited. If the Microsoft Merger Agreement is terminated, or the Covered NEO’s employment continues past the eligible time period to receive severance benefits under the Enhanced Severance Plan, then the Covered NEO also would be required to repay the applicable cash amount underlying the Accelerated Severance within 60 days of such termination.

Actual performance under the CAIP. If the FY22 CAIP Payout performance multiplier ultimately determined to be applicable for fiscal year 2022 annual incentive plan participants generally (“Actual Performance Multiplier”) exceeded 68% of target performance (the deemed performance for purposes of determining the Accelerated CAIP Payout), then the Company was required to pay the Covered NEO at the time the FY22 CAIP Payout was generally paid to fiscal year 2022 annual incentive plan participants an amount equal to the difference between the Actual Performance Multiplier and 68% with respect to the Covered NEO’s fiscal year 2022 annual incentive (“FY22 CAIP Payout Differential”), less applicable taxes and withholdings. However, if the Actual Performance Multiplier was less than 68%, then the Covered NEO would have been required to repay the Company at the time the FY22 CAIP Payout was generally paid to fiscal year 2022 annual incentive plan participants the Covered NEO’s FY22 CAIP Payout Differential on a net after-tax basis.

Actual performance for PSU awards. If the PSU performance multiplier ultimately determined to be applicable to a PSU generally for which a Covered NEO has received an Accelerated PSU (“Actual PSU Performance Multiplier”) exceeded the applicable estimated performance achievement level assumed for purposes of determining such Accelerated PSU, then the Company was required to issue to the Covered NEO at the time of the original settlement date for such PSU an amount, in shares of Common Stock, equal to the difference between the Actual PSU Performance Multiplier and such applicable estimated performance achievement level (“PSU Differential”), less applicable taxes and withholdings. However, if the Actual PSU Performance Multiplier had been less than such applicable estimated performance achievement level, then the Covered NEO would have been required to repay the Company at the time of the original settlement date for such PSU either the (1) number of shares of Common Stock underlying the PSU Differential or (2) proceeds received by the Covered NEO from the sale of the shares of Common Stock underlying the PSU Differential on an after-tax basis.

The Compensation Committee determined in March 2023 that the Actual Performance Multiplier for the Covered NEOs equaled 94%, and the Company accordingly paid the Covered NEOs their respective FY22 CAIP Payout Differential (which the Company elected to pay in shares of Common Stock in lieu of cash), less applicable taxes and withholdings. The Compensation Committee also determined in March 2023 that the Actual PSU Performance Multiplier, in all cases, equaled or exceeded the preliminary certified levels, and the Company accordingly has issued or will issue to each Covered NEO an amount, in shares, equal to the PSU Differential in respect of each applicable Accelerated PSU, less applicable taxes and withholdings.

If a Covered NEO is required to make any of the foregoing repayments and fails to repay such amounts in a timely manner, the Covered NEO will be required to reimburse the Company for any reasonable fees (including reasonable attorney’s fees) or costs incurred in connection with seeking repayment. At the time of filing this proxy statement, the Covered NEOs were not required to repay any Accelerated Amounts.

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Certain NEOs Entitled to Terminate Employment for “Good Reason”

Pursuant to the Microsoft Merger Agreement, Activision Blizzard and Microsoft have agreed that certain of our executives, including the Covered NEOs, will be entitled to terminate their employment with “good reason” within 60 days following the six-month anniversary of closing of the proposed transaction with Microsoft. Any such termination with “good reason” would entitle the executive to the severance benefits under the executive’s individual arrangements or, if greater, the Enhanced Severance Plan, as well as the equity acceleration benefits described in the Merger Proxy Statement.

Requirement to Grant RSUs Due to Restriction on Granting PSUs

Pursuant to the Microsoft Merger Agreement, we are permitted to grant new PSU awards to employees only if we were contractually obligated to do so as of January 18, 2022, and we otherwise must make new grants to employees in the form of RSU awards. We do not believe this restriction will materially limit our ability to motivate our employees, since our outstanding PSUs and annual incentives will continue to be measured based on actual performance for all performance periods completed before the proposed transaction with Microsoft closes. Given our past practice of aligning incentives with financial performance, each NEO with outstanding equity awards, other than Mr. Alegre, who is no longer employed by the Company, has annual and long-term incentive compensation tied to financial performance in 2023 and future years. For further details regarding our ability to grant equity awards under the Microsoft Merger Agreement, please see the Merger Proxy Statement.

HOW WE MAKE DECISIONS ABOUT EXECUTIVE COMPENSATION

Factors Influencing Compensation Decisions

Our Compensation Committee believes that executive pay should be determined using a comprehensive approach, involving an evaluation of a wide variety of relevant factors, including:

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The Compensation Committee does not use a predefined framework to weigh the relative importance of these factors, and the emphasis placed on specific factors may vary from executive to executive. Ultimately, the terms on which any given executive officer is employed reflect the Compensation Committee’s independent judgment regarding the amount and form of compensation necessary to attract, retain, and motivate that individual. An example of how we reference market data but make our own decisions is the fact that, although many of our compensation peers include RSUs either as part of the long-term compensation mix or as the sole equity vehicle, prior to entering into the Microsoft Merger Agreement, we primarily used PSUs that promote pay-for-performance and better align our programs with the interests of our shareholders. For 2022, the Compensation Committee also considered potential impacts and other factors related to the proposed transaction with Microsoft, which resulted in our use of RSUs instead of PSUs, as well as our actions to mitigate the potential impact of certain tax provisions and our related use of the Acceleration and Clawback Agreements with the Covered NEOs, as described above.

How the Competitive Business Environment Affects Our Talent Requirements

We operate in the interactive entertainment industry, which exists at the nexus of the gaming, media, entertainment, and technology sectors. Compiling a team of top executives with the necessary characteristics requires us to recruit from those and other sectors—often from companies that are larger and more mature than ours.

Our industry is intensely competitive and constantly evolving. It features a number of unique characteristics, including:

We believe that, in order to succeed in this fast-changing business environment, we require executive talent with specialized qualifications, including:

Why We Use Employment Agreements

Our employment agreements with executives specify the minimum amounts of base salary, incentive opportunities, and certain terms and conditions of the executive’s equity awards, and include provisions regarding the consequences of termination of employment, as well as restrictive covenants, such as non-competition and non-solicitation provisions. The terms of the employment agreements with each of our executives have been ratified by the Compensation Committee, which used its judgment to determine the appropriate amount and form of compensation and other employment terms necessary to recruit, retain, and motivate the executive, based in part on specific negotiations with the executive.

Employment agreements are common in the broader, highly competitive entertainment industry from which we recruit talent. We believe that multi-year employment agreements are critical in enabling us to attract and retain our executives. Using multi-year contracts also allows us to create compensation arrangements with a mix of incentive opportunities designed to reward executives for achieving both short- and long-term goals. For example, under the terms of their respective employment agreements, each of our NEOs has received, or is eligible to receive, incentive awards based on financial metrics or shareholder returns over a variety of performance and service periods. For more information on the NEOs’ employment agreements with the Company, see “—Employment Agreements” below.

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How We Use Peer Company Data and Compensation Surveys

In selecting a peer group, the Compensation Committee thoughtfully considers a range of factors to ensure that the companies are, individually and in aggregate, relevant. While we use six factors to assess relevance, not all companies will meet all criteria; the Compensation Committee’s judgment is required in ultimately assessing direct relevance to Activision Blizzard.

The peer group is reviewed periodically to ensure continued relevance from the perspectives of talent, industry, business model, and operational scale, and to address M&A activity.

The Compensation Committee in 2022 reviewed the peer group and determined no changes were necessary (other than to reflect name changes following corporate actions involving two companies in the 2021 peer group, as described in the table below).

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The 2022 peer group consisted of the following 15 companies:

At the time this peer group was approved, Activision Blizzard was positioned at:

Some of our closest competitors for talent are Tencent Holdings Ltd., Meta Platforms, Inc., Alphabet Inc., Amazon.com, Inc., and Apple Inc. However, these companies are not included in our peer group because they all have significantly larger market value capitalizations.

In evaluating our executive compensation program, the Compensation Committee utilizes data obtained from SEC filings made by our peer companies, including NEO target and actual compensation, company-wide equity usage rates, and potential dilution. In addition, the Compensation Committee, with the support of its independent compensation consultant and management, annually consults third-party surveys prepared by compensation specialists with respect to companies with comparable revenues, market capitalization, industry focus, number of employees, and other similar business-related factors in order to discern broader compensation trends in the market.

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This compensation data provides an important contextual frame of reference with respect to the markets we compete in. The Compensation Committee also considers other sources to inform compensation structure, including practices of other relevant companies and broader industry trends. The Compensation Committee does not target a specific market percentile for any element of compensation or for total compensation packages. Instead, it assesses pay levels using a comprehensive approach.

Key Participants in the Executive Compensation Decision-Making Process

Compensation Committee

For additional information regarding the Compensation Committee, see “Corporate Governance Matters—Board Committees—Compensation Committee” above.

Compensation Committee’s Independent Compensation Consultant

Role of the Consultant

Since October 2013, the Compensation Committee has retained Exequity as its independent compensation consultant. Exequity does not provide any services to us other than the services provided to the Compensation Committee. Our Compensation Committee also has retained Paul Hastings as its legal advisor.

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Independence Determination

Our Compensation Committee assessed its engagement of each of Exequity and the Committee’s outside legal counsel, including on the basis of information provided by the two firms, and does not believe the services of either firm to the Compensation Committee raise any conflicts of interest.

Executive Officers and Management

Our named executive officers and our Chief People Officer:

Our CEO reviews the performance of the Company’s executive officers (other than himself) and provides recommendations to the Compensation Committee with respect to compensation of those officers.

No member of management has a direct role in determining his or her own compensation. Further, decisions pertaining to the compensation of our Chief Executive Officer are reviewed and discussed by the Compensation Committee in executive session, without the presence of the Chief Executive Officer or any other member of management.

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Compensation Policies that Mitigate Risk

We have adopted policies that are intended either to align our executives’ long-term interests with those of our shareholders or to provide the Company with certain protections.

Clawback Policy

Activision Blizzard has maintained a “clawback policy” for over a decade. In the event of an earnings restatement due to the misconduct of an executive officer, the Company may seek to recover performance-based compensation paid or awarded to that executive. The policy covers both short-term compensation under the CAIP and long-term incentive awards (e.g., equity awards), and applies to any Section 16 officer. The full “Policy on Recoupment of Performance-Based Compensation Related to Certain Financial Restatements” can be found on our website at http://investor.activision.com/corporate-governance.cfm.

Executive Stock Ownership Guidelines

We believe that every executive officer should maintain a meaningful ownership stake in the Company. To that end, Activision Blizzard has long imposed stock ownership guidelines to further align the interests of our officers with those of our shareholders. The Executive Stock Ownership Guidelines can be found on our website at http://investor.activision.com/corporate-governance.cfm.

The Chief Executive Officer is required to beneficially own Company stock with a value at least equal to 50 times his then-current base salary. All other executive officers, as well as the President of each of Activision Publishing, Blizzard, and King, are required to beneficially own shares of our Common Stock with a value at least equal to their then-current annual base salary. We do not include restricted stock or RSUs in determining compliance with these requirements.

The individuals subject to these guidelines are expected to accumulate the required stock by the fifth anniversary of the date they became an executive officer. If any such person does not satisfy these guidelines by the end of the five-year period, then, until they satisfy the guidelines, they will be required to hold 50% of the net shares received upon exercise of stock options or upon the vesting of RSU awards received (provided such shares received are under equity awards made after the adoption of the ownership guidelines and that such awards are, per their terms, explicitly subject to them).

As of April 1, 2023, each person who, as of that date, had been subject to the guidelines for five or more years, satisfied them.

Anti-Hedging Policy

We prohibit our directors and employees (including executives) from directly or indirectly “shorting” our securities, engaging in “put” or “call” or other “hedging” transactions involving our stock, or establishing or using a margin account with a broker-dealer to trade our securities. This restriction extends to any entity over which any employee or immediate family member sharing the same household of any employee has or shares voting or investment control.

Anti-Pledging Policy

We prohibit our directors, NEOs and other Section 16 officers, and the President of each of Activision Publishing, Blizzard, and King from pledging Company securities as collateral for any type of loan.

Incentive Design

See “Corporate Governance Matters—Our Board’s Role in Risk Oversight—Compensation Risk Management” for the features of our incentive compensation plans that help mitigate risk.

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ELEMENTS OF OUR EXECUTIVE COMPENSATION PROGRAM FOR 2022

The primary elements of our executive compensation program and their purposes are described below. Not all elements are applicable to all NEOs. We aim to incentivize our executives to drive corporate financial and operational performance by basing a significant portion of their compensation on the achievement of financial and strategic objectives.

In October 2021, our CEO, Mr. Kotick, asked that his compensation, excluding the value of benefits, be reduced to the lowest amount permitted to be paid to exempt employees under California law until the Company has made appropriate progress toward the achievement of the Transformational Goals. Consequently, Mr. Kotick’s annual base salary was reduced to $62,500 (the lowest amount permitted to be paid to exempt employees under California law, rounded to the nearest $500) effective as of October 28, 2021, and he did not receive any awards of equity incentive compensation or non-equity incentive compensation during 2021 or 2022.

Base Salary

In establishing the annual base salary rate for an executive officer, the Compensation Committee considers the individual’s role, performance, and annualized total compensation opportunities; salaries paid to the executive’s peers within the Company; and the total compensation opportunities of executives in comparable positions or with similar responsibilities at other companies by reference to data from our peer group and published surveys. For information about our peer group, see “—How We Make Decisions About Executive Compensation—How We Use Peer Company Data and Compensation Surveys” above.

None of our NEOs is contractually entitled to salary increases (see “—Employment Agreements” below). Executive officers generally receive salary increases only:

The table below reflects the annual base salary for our NEOs during 2022, which remained unchanged throughout 2022.