8-KLeadership ChangesMaterial AgreementsFinancial Events+4

TAKE TWO INTERACTIVE SOFTWARE INC 8-K Report, Material Agreement (Apr 4, 2007)

Filed April 4, 2007For Securities:TTWO

Summary

Take-Two Interactive Software, Inc. (TTWO) filed an 8-K on April 4, 2007, detailing significant corporate governance and management changes. A key development is the entry into a Material Definitive Agreement with ZelnickMedia Corporation, effective March 30, 2007. This agreement establishes ZelnickMedia as a financial and management consultant for TTWO, with Strauss Zelnick set to assume the role of Chairman. ZelnickMedia will receive a monthly fee, potential bonuses, and equity in the form of stock options and restricted stock. This move signals a strategic shift in management and oversight for the company. Furthermore, the filing addresses the departure of former CEO Paul Eibeler, who entered into a Separation Agreement and General Release. Eibeler will serve as a consultant for six months, receiving a monthly fee and benefits, alongside a significant severance package and accelerated vesting of equity awards. The company also disclosed that it notified NASDAQ of an insufficient number of members on its Audit Committee and plans to rectify this promptly. This 8-K marks a period of substantial transition for Take-Two Interactive.

Key Highlights

  • 1Take-Two Interactive entered into a Management Agreement with ZelnickMedia Corporation, positioning Strauss Zelnick as Chairman and a key consultant.
  • 2ZelnickMedia's compensation includes a $62,500 monthly fee, potential annual bonus up to $750,000, stock options for 2.5% of outstanding shares, and restricted stock.
  • 3Former CEO Paul Eibeler's employment was terminated effective April 4, 2007, under a Separation Agreement.
  • 4Paul Eibeler will receive $2,475,000 in severance, continued benefits, and will act as a consultant for six months.
  • 5The company elected a new slate of directors at its Annual Meeting and expanded the Board's size.
  • 6Take-Two notified NASDAQ about its Audit Committee having only two members and is working to add a third member to comply with listing rules.
  • 7Stockholders approved an increase of 2,000,000 shares reserved under the Incentive Stock Plan.

Frequently Asked Questions

The Management Agreement with ZelnickMedia signifies a strategic restructuring of Take-Two Interactive's leadership and advisory capacity. It brings in ZelnickMedia, led by Strauss Zelnick, to provide financial and management consulting services. Strauss Zelnick will also assume the role of Chairman, giving him significant influence over the company's direction and executive appointments.

Paul Eibeler, the former CEO, has been terminated and will receive a substantial severance package of $2,475,000, along with continued benefits for six months. He will also serve as a consultant to the company on an as-needed basis during this period, and his existing equity awards will have their vesting requirements satisfied.

Take-Two Interactive held its Annual Meeting where a new slate of directors was elected, and the size of the Board was expanded. Strauss Zelnick was appointed Chairman, and Benjamin Feder was named acting CEO. Key committees, such as the Audit Committee and Compensation Committee, also saw new appointments and leadership.

The company has notified The NASDAQ Stock Market that its Audit Committee currently has only two members, which is below the required three members. Take-Two Interactive stated its intention to add a third member in a timely manner to comply with the listing rule.