Skip to main content

How much video game CEOs make — and why they may be overpaid

While developing video games is a notoriously difficult and time-intensive job, moving up the ladder to CEO seems to be a lucrative career move.

In an analysis of video game company CEO compensation packages for four companies that make the information public — Activision Blizzard, Electronic Arts, Take-Two, and Ubisoft — Digital Trends found that the average video game CEO makes tens of millions of dollars a year in salary and performance-based stock awards.

But that doesn’t mean they’re always worth it.

Major Activision Blizzard shareholder CtW Investment Group filed a petition with the Securities and Exchange Commission (SEC) this week, asking shareholders to vote “no” on a “Say-On-Pay” proposal at Activision’s annual meeting on June 11.

The provision, which will need to be approved by shareholders to go into effect, would allow the Activision board to continue paying CEO Bobby Kotick tens of millions of dollars a year.

“Despite repeated low approval votes from shareholders, Activision Blizzard maintains multiple, overlapping opportunities for its CEO to earn outsize equity awards, even when performance-related vesting thresholds have not been met,” the investor wrote.

Kotick earned $30.1 million last year, down from $30.8 million in 2018. Over the past four years, alone, he’s made $96.5 million in compensation.

Although Kotick’s pay barely declined last year, the same can’t be said for Activision’s performance. The company generated $6.5 billion in revenue in 2019, down from $7.5 billion in 2018. Its $1.5 billion profit fell from $1.8 billion in the prior year.

But CtW isn’t the only group pointing to the possibility that Kotick, who has consistently been one of the top 20 highest-paid public company CEOs for the past decade, is overpaid.

For two straight years, shareholder advocacy organization As You Sow has listed Kotick has one of the top 100 “most overpaid” CEOs in the world, and in 2019, slapped him with the 45th spot.

As You Sow bases its list on shareholder sentiment toward the chief executive and the amount of stock value the person has returned to shareholders. And the organization estimates that Kotick was paid $12.8 million more last year than he should’ve been, based on company performance and shareholder sentiment.

In a statement to Digital Trends, however, Activision Blizzard scoffed at such claims. The company said Kotick has increased the company’s market value from $10 million to $53 billion during his tenure and has easily outperformed the S&P 500 in the last five years.

But Kotick is far from the only highly paid — or possibly overly paid —  gaming CEO.

Electronic Arts CEO Andrew Wilson landed in the 98th spot in As You Sow’s 2019 evaluation. The organization said he made $19.7 million more than he should have in EA’s 2018 fiscal year while he earned $35.7 million.

However, EA’s 2018 fiscal year appears to have been an outlier, thanks to the board awarding him additional stock. In EA’s 2017 fiscal year, Wilson earned a total of $20 million. In its 2019 fiscal year, Wilson took home $18.3 million in total compensation.

Wilson has had a few good years as EA’s chief executive. Last year, the company generated $5.5 billion in revenue and $3 billion in profit. In the prior year, revenue topped $5 billion and profits hit $1 billion.

Wedbush analyst Michael Pachter declined to comment on whether the chief executives are overpaid. He has, however, given “Overweight” ratings on both EA and Activision’s stock, suggesting they’re expected to succeed going forward and shareholders should consider buying shares. Activision is also on Wedbush’s “Best Ideas List,” a collection of companies expected to grow in the next year.

Take-Two Interactive chief Strauss Zelnick didn’t make As You Sow’s list of overpaid chief executives, but he certainly makes a bundle of cash. According to the company’s latest filings, he made $28.7 million last year. Take-Two’s revenue hit $3.1 billion in 2019, but it could only muster a $404 million profit. In the prior year, Take-Two made $2.7 billion in revenue and turned a $334 million profit.

In 2019, Ubisoft CEO Yves Guillemot made just $2.2 million, a nice sum for most, but a pittance in the gaming industry. The company brought in $1.7 billion in revenue last year and posted a $39 million profit.

Needless to say, it’s good to be a game company CEO. But ultimately, it’s important to put those figures in context.

As their CEOs make millions of dollars a month, the game developers who actually make the games publishers make an average of $101,644, according to ZipRecruiter. And with layoffs such a common occurrence that there’s a website called “Video Game Layoffs” dedicated to tracking mass job cuts at developers, shareholders may not be the only ones wondering if industry CEOs are overpaid.

Editors' Recommendations