The Real Reason Take-Two Rejected EA's Offer?

OK, bear with me. ZelnickMedia are an investment firm who were brought in to run Take-Two. Take-Two's executive chairman is a Mr. Strauss Zelnick, a member of ZelnickMedia's "executive parntership". EA have made two offers to buy Take-Two, one on February 6, one on February 19. Very shortly after receiving the first offer, and before they received the second offer (or told shareholders about it), Take-Two's board of directors and ZelnickMedia approved a "major increase in compensation" (ie a payrise) for Mr. Zelnick, along with CEO Ben Feder and executive VP Karl Slatoff (also ZelnickMedia members). Part of that deal included a hefty stocks payout for Zelnick, who received shares in the company that would either mature in time or - and here's the kicker - half of which would vest (ie pay out) immediately should the company be bought.

The timing of this move is more than a little suspect, and has understandably caught the attention of business analysts and corporate governance experts alike. While pay increases and stock deals for executives are common, negotiating a deal that will see you make big money if your company is bought while an offer to buy the company is on the table raises some ethical questions.

In his defence, Zelnick argues that since taking over the company, he's turned their fortunes around, as evidenced by EA's takeover interest. Also, it's worth remembering the pay deal's not final: while ZelnickMedia and Take-Two's board have approved it, shareholders need to agree to it as well before it's finalised.

Either way, the matter should be settled after April 30, the date Zelnick said he'd reopen discussions with EA: if he nets Take-Two shareholders an increase over the $26 per share EA originally offered, his new share deal will be just rewards. But if he signs off on the deal for what EA were originally offering before his shiny new pay package was drawn up...well, he might find himself in trouble.
Take-Two Raises Eyebrows [Wall Street Journal]
Zelnick's Take-Two compensation: a fair and balanced appraisal [Variety]


    EA will never own Take Two Interactive, all they want is Grand Theft Auto EA just needs to make their own game and stop all the bullshit.

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