According to the lawsuit filed in Delaware, this allowed Kotick, Brian Kelly (Activision's Chairman) and their investment partners (including Tencent Holdings Ltd.) to gain a 25% stake in the company at the same rate that Activision itself paid for the remainder. This is claimed to have allowed them to get away with not paying a premium for control over the company. The lawsuit alleges that this is an improper benefit to Kotick, Kelly and their group.
What's really fascinating is that Kotick's stand on this issue, going so far as to threaten to resign in 2013, seems to have been seriously considered by parent company Vivendi. Former Vivendi CEO Jean-Francois Dubos and then-CFO Phillipe Capron were among those speculating on firing Kotick, with Capron going so far as to volunteer to do it the very next day after the email exchange in May of 2013. Considering he was one of the highest paid CEO's of any game company, I'm surprised they chose to back down -- perhaps his contract made firing him punishingly expensive. In the end, Vivendi blinked first and Kotick and his group got to make exactly the deal that they're getting sued over now.
Filed under: Analysis / Opinion