Activision Blizzard (ATVI)

Factors Considered in Compensation Decisions, including Competitive Assessment, Benchmarking and Internal Equity

        In general, the Company's senior management and the Compensation Committee believe that benchmarking and competitive assessments comprise only one aspect of a larger decision-making framework to be considered when making compensation decisions. This framework includes:

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peer benchmarking;

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compensation survey analysis;



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relative internal equity among the executive team; and



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an individual's skill set, experience, historical performance and expected future value to the Company.

        The Company occasionally conducts peer benchmarking activities to determine yearly salary increases, annual incentive awards, long-term incentive or equity arrangements and terms of employment agreements. In reviewing competitive assessment studies, management believes there exist a limited number of publicly traded, direct peer companies with a similar size and scope in the video game industry, including:

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Electronic Arts;



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THQ; and



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Take-Two.

        Specifically, in connection with the amendment to Mr. Kotick's employment agreement in December 2007, the Compensation Committee reviewed a peer-group analysis prepared by Frederic Cook with the goal of ensuring that the compensation and benefits provided to Mr. Kotick were in a competitive range for the marketplace for executive talent. The analysis included peer group companies that would match the Company's size and line of business following the Combination with Vivendi Games to create Activision Blizzard. The peer group consisted of the following publicly traded technology and software industry companies:

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Autodesk, Inc.;



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BMC Software, Inc.;



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CA,  Inc. (Computer Associates);



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Cadence Design Systems, Inc.;



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Citrix Systems, Inc.;



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eBay, Inc.;



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Electronic Arts Inc.;



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Intuit Inc.;



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Motorola, Inc.;



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Symantec Corporation;



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VeriSign, Inc.;



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Xerox Corporation; and



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Yahoo! Inc.

        Based on its analysis of the compensation payable under Mr. Kotick's amended employment agreement, the Compensation Committee determined that the Company would compensate Mr. Kotick at approximately the 65^th percentile of the peer group. Although the Compensation Committee determined that it was important to review benchmarking data in setting the amount and terms of Mr. Kotick's compensation under his employment agreement, this was not the only information used by the Compensation Committee to determine his compensation.

        The Company also annually consults outside industry and non-industry specific surveys prepared by compensation specialists with respect to companies with comparable revenues, market capitalization,

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industry focus, number of employees and other similar factors. The surveys include the Croner Entertainment Software Compensation Survey, the Mercer Executive Compensation Survey, the Radford Executive Survey and the Buck Consultants Total Direct Compensation Survey. These surveys help the Company understand the competitive market for the industries in which it competes for talent, including the gaming, media and consumer products sectors.