ACTIVISION BLIZZARD,INC. (NASDAQ:ATVI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Johnson Employment Agreement. Mr. Johnson’s term of employment under his agreement begins on June 26, 2017 and ends on June 30, 2020 (subject to the Company’s right to extend for an additional year). The agreement provides for: a minimum annual base salary of $1,300,000; eligibility to receive annual discretionary bonuses targeted at 50% of base salary, with an opportunity to receive an additional bonus ranging from 10% to 50% of base salary for any year in which earnings per share growth equals or exceeds 15% of the higher of the previous year’s approved annual operating plan goal and actual results (with a maximum payout being received if such earnings per share growth is at least 24%); participation in other benefits generally available to executives; a Company-paid supplemental life insurance policy with a face amount of $3 million; and a payment of $2.2 million as a long-term contract inducement, $1 million of which will be paid shortly after he commences employment and the remainder of which will be paid in January 2018. The entire $2.2 million payment is subject to “clawback” if Mr. Johnson leaves the Company’s employment in certain situations within one year of receiving such payment.

Mr. Johnson will initially be granted equity awards having a target value at grant of $15 million ($17.25 million at maximum performance), consisting of: options ($6.0 million grant value) vesting on June 29, 2020; and performance-vesting restricted share units ($9.0 million grant value at target, $11.25 million at maximum performance), two-ninths of which will vest on each of June 29, 2018, 2019 and 2020, in each case based upon the level of achievement of the operating income objective for the Company set forth in its annual operating plan for the prior year, and one-ninth of which will vest on each of June 29, 2018, 2019 and 2020, in each case based upon the level of achievement of the earnings per share objective for the Company set forth in its annual operating plan for the prior year. Elements of Mr. Johnson’s compensation arrangement are designed to incent multi-year growth. Beginning in 2018, Mr. Johnson is eligible to receive: additional annual grants of performance-vesting restricted share units with vesting based on the achievement of the Company’s three-year growth plans, with a target value of $1.0 million per year; and additional annual grants of performance-vesting restricted share units with vesting based on year-over-year earnings per share growth of at least 15%, with a target value of $3.0 million per year. In 2020, Mr. Johnson is eligible to receive an additional one-time equity grant with a target value of $3.0 million.

If the agreement is terminated by reason of Mr. Johnson’s death, his heirs or estate will be entitled to receive, in addition to any amounts earned or accrued but unpaid, a lump sum payment of two times his base salary, and any vested options will generally remain exercisable for one year after his death. If the agreement is terminated by the Company without “cause”, by Mr. Johnson due to the relocation of his principal place of business, or as a result of his disability, he is entitled to receive, in addition to any amounts earned or accrued but unpaid, salary continuation through the expiration date of the agreement, a pro rata annual bonus with respect to the current year and in the case of his termination due to disability, any vested options will generally remain exercisable for one year after such termination. In addition, if the agreement is terminated for any of the above-referenced reasons prior to June 29, 2020, then Mr. Johnson (or his heirs or estate) will receive an additional severance payment of $2.0 million if such termination is after December 31, 2017 and the Company’s operating income for 2017 is at least 90% of the target set forth in the Company’s annual operating plan for the year and positive; an additional severance payment of $2.0 million if such termination is after December 31, 2018 and the Company’s operating income for 2018 is at least 90% of the target set forth in the Company’s annual operating plan for the year and positive; and an additional severance payment of $2.0 million if such termination is after December 31, 2019 and the Company’s operating income for 2019 is at least 90% of the target set forth in the Company’s annual operating plan for the year and positive.

Further, if the agreement is terminated for any of the above-referenced reasons and such termination occurs after the completion of a performance period for any tranche of his initial grant of restricted share units for which the applicable performance objective has been achieved, then an amount calculated in accordance with the agreement will be paid by the Company in consideration of the termination of the performance award prior to its vesting. Certain payments contemplated by the agreement that would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code are subject to reduction.

Neumann Employment Agreement. Mr. Neumann’s term of employment under his agreement begins on May 30, 2017 and ends on April 30, 2020 (subject to the Company’s right to extend for an additional year). The agreement provides for: a minimum annual base salary of $850,000; eligibility to receive annual discretionary bonuses targeted at 150% of base salary; participation in other benefits generally available to executives; a Company-paid supplemental life insurance policy with a face amount of $5 million; and, if he begins his employment on or before May 30, 2017, a payment of $2 million as a long-term contract inducement, half of which will be paid in cash shortly after he commences employment and the remainder of which will be paid in cash or equity, at his election, on May 30, 2018.

Mr. Neumann will initially be granted equity awards having a target value at grant of $14 million ($23 million at maximum performance), consisting of: options ($2.8 million grant value) vesting in four equal installments on each of the first four anniversaries of April 14, 2017; performance-vesting restricted share units ($7.5 million grant value at target, $9.3 million at maximum performance), one-quarter of which will vest on each of March 31, 2018, 2019, 2020 and 2021, in each case based upon the level of achievement of the earnings per share objective for the Company set forth in its annual operating plan for the prior year; and additional performance-vesting restricted share units ($3.7 million grant value at target, $11.2 million at maximum performance), one-quarter of which will vest on each of March 31, 2018, 2019, 2020 and 2021, in each case based upon the Company’s operating income for the prior year as compared to the Company’s operating income for the year prior to that, with additional vesting opportunities in the event that actual performance with respect to the operating income goal for any year exceeds 115% of the target. To incent multi-year growth, he is also eligible to receive additional annual equity grants with vesting based on the achievement of the Company’s three-year growth plans, with a target value of $1.4 million per year, beginning in 2017.

If the agreement is terminated by reason of Mr. Neumann’s death, his heirs or estate will be entitled to receive, in addition to any amounts earned or accrued but unpaid, a lump sum payment of two times his base salary, a pro rata annual bonus with respect to the year of his death, and continued health insurance for his spouse and minor children for one year, and any vested options will generally remain exercisable for one year after his death. If the agreement is terminated by the Company without “cause”, by Mr. Neumann due to the relocation of his principal place of business or a material diminution in his responsibilities, duties or title, or as a result of his disability, he is entitled to receive, in addition to any amounts earned or accrued but unpaid, salary continuation through the expiration date of the agreement, a pro rata annual bonus with respect to the current year, continued health insurance for himself, his spouse and his minor children for up to one year, and in the case of his termination due to disability, any vested options will generally remain exercisable for one year after such termination. In addition, if the agreement is terminated for any of the above-referenced reasons, and such termination occurs after the completion of a performance period for any tranche of either grant of restricted share units for which the applicable performance objective has been achieved, then an amount calculated in accordance with the agreement will be paid by the Company in consideration of the termination of the performance award prior to its vesting. Certain payments contemplated by the agreement that would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code are subject to reduction.

Tippl Employment Agreement. Mr. Tippl’s term of employment under this agreement began as of May 5, 2017 and will continue until terminated by either party upon three months’ prior notice. Mr. Tippl’s employment agreement provides: for him to continue to receive his current annual base salary ($1,433,250); for him to remain eligible to participate in the Company’s annual bonus program for 2017 on the current terms of his participation (target of 150% of base salary); and that the Company will continue to provide him with a Company-paid life insurance policy (face amount of $9.4 million).

Mr. Tippl will be granted a one-time equity award of performance-vesting restricted share units having a value at grant of $3 million, one-half of which will vest on each of December 31, 2018 and December 31, 2019, in each case if the earnings per share objective for the Company set forth in its annual operating plan for the prior year is met or exceeded. He is also eligible to receive additional annual equity grants with vesting based on the achievement of the Company’s three-year growth plans.

If the agreement is terminated by the Company without “cause” or as a result of Mr. Tippl’s death or disability, his outstanding equity awards will remain outstanding and will vest if and when the underlying performance metrics are satisfied as if his employment had not been terminated.

Durkin Employment Agreement. Mr. Durkin’s term of employment under his agreement begins as of May 1, 2017 and ends on March 15, 2018. The agreement provides for: a minimum annual base salary of $900,000; eligibility to receive annual discretionary bonuses targeted at 150% of base salary; participation in other benefits generally available to executives; and a Company-paid supplemental life insurance policy with a face amount of $3 million.

Mr. Durkin will initially be granted equity awards having a target value at grant of $3.5 million ($4.2 million at maximum performance), consisting of: options ($700,000 grant value) vesting on March 14, 2018; and performance-vesting restricted share units ($2.8 million grant value at target, $3.5 million at maximum performance) vesting on March 14, 2018, one-half of which based on the level of achievement of the operating income objective for the Company set forth in its annual operating plan for 2017, one-quarter of which based on the level of achievement of the earnings per share objective for the Company set forth in its annual operating plan for 2017, and one-quarter of which based on the level of achievement of the operating income objective for Activision Publishing set forth in the Company’s annual operating plan for 2017. He is also eligible to receive additional annual equity grants with vesting based on the achievement of the Company’s three-year growth plans, with a target value of $500,000 per year, beginning in 2017.

If the agreement is terminated by reason of Mr. Durkin’s death, his heirs or estate will be entitled to receive, in addition to any amounts earned or accrued but unpaid, a lump sum payment of two times his base salary and a pro rata annual bonus with respect to the current year, and any vested options will generally remain exercisable for one year after his death. If the agreement is terminated by the Company without “cause”, by Mr. Durkin due to relocation of his principal place of business, or as a result of his disability, he is entitled to receive, in addition to any amounts earned or accrued but unpaid, salary continuation through the expiration date of the agreement and a pro rata annual bonus with respect to the current year, and with respect to termination due to disability, any vested options will generally remain exercisable for one year after such termination. In addition, if (1) the agreement is terminated for any of the above-referenced reasons between December 31, 2017 and March 14, 2018 (i.e., the vesting of his options) and (2) the Company’s operating income for 2017 is at least 90% of the target set forth in the Company’s annual operating plan for the year and positive, then Mr. Durkin (or his heirs or estate) will receive a payment of $700,000 in consideration of the termination of the options prior to their vesting. Further, if the agreement is terminated for any of the above-referenced reasons between December 31, 2017 and March 14, 2018 (i.e., the vesting of his restricted share units) and the performance objective under any tranche of that grant has been achieved, Mr. Durkin (or his heirs or estate) will be eligible to receive an amount calculated in accordance with the agreement in consideration of the termination of the performance award prior to its vesting. Certain payments contemplated by the agreement that would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code are subject to reduction.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits

10.1 Employment Agreement, dated May 10, 2017, between Activision Blizzard, Inc. and Collister Johnson.

10.2 Employment Agreement, dated May 5, 2017, between Activision Blizzard, Inc. and Spencer Neumann.

10.3 Employment Agreement, dated May 5, 2017, between Activision Blizzard, Inc. and Thomas Tippl.

10.4 Employment Agreement, dated May 10, 2017, between Activision Blizzard, Inc. and Dennis Durkin.

About ACTIVISION BLIZZARD, INC. (NASDAQ:ATVI)
Activision Blizzard, Inc. is a developer and publisher of interactive entertainment content and services. The Company develops and distributes content and services across various gaming platforms, including video game consoles, personal computers (PC) and mobile devices. Its segments include Activision Publishing, Inc. (Activision), Blizzard Entertainment, Inc. (Blizzard), King Digital Entertainment (King) and Other. Activision is a developer and publisher of interactive software products and content. Blizzard is engaged in developing and publishing of interactive software products and entertainment content, particularly in PC gaming. King is a mobile entertainment company. It is engaged in other businesses, including The Major League Gaming (MLG) business; The Activision Blizzard Studios (Studios) business, and The Activision Blizzard Distribution (Distribution) business. It also develops products spanning other genres, including action/adventure, role-playing and simulation. ACTIVISION BLIZZARD, INC. (NASDAQ:ATVI) Recent Trading Information
ACTIVISION BLIZZARD, INC. (NASDAQ:ATVI) closed its last trading session down -0.24 at 55.75 with 8,243,695 shares trading hands.