8-KLeadership ChangesMaterial AgreementsCorporate Changes+1

TAKE TWO INTERACTIVE SOFTWARE INC 8-K Report, Material Agreement (Feb 15, 2008)

Filed February 15, 2008For Securities:TTWO

Summary

Take-Two Interactive Software, Inc. (TTWO) has filed an 8-K reporting a significant amendment to its Management Agreement with ZelnickMedia Corporation, effective February 14, 2008. This amendment substantially increases the monthly management fees and the potential annual bonus payable to ZelnickMedia. Key executive roles have also been formalized, with Strauss Zelnick appointed Executive Chairman, Ben Feder named Chief Executive Officer, and Karl Slatoff appointed Executive Vice President. These appointments are supported by new employment agreements for Feder and Slatoff, each with a nominal annual salary of $1, with their compensation primarily tied to the ZelnickMedia management agreement. The term of the management agreement has been extended, and significant equity grants in the form of restricted stock are planned for ZelnickMedia, contingent upon stockholder approval. Additionally, the company's bylaws have been amended to include an advance notice provision for stockholder proposals.

Key Highlights

  • 1Significant increase in monthly management fees to ZelnickMedia, from $62,500 to $208,333, effective April 1, 2008.
  • 2Substantial increase in ZelnickMedia's maximum annual bonus potential, from $750,000 to $2,500,000, subject to performance thresholds.
  • 3Formal appointment of key executives: Strauss Zelnick as Executive Chairman, Ben Feder as CEO, and Karl Slatoff as Executive Vice President.
  • 4New employment agreements for Ben Feder and Karl Slatoff with $1 annual salaries, reflecting their compensation structure through ZelnickMedia.
  • 5Extension of the Management Agreement with ZelnickMedia through October 31, 2012.
  • 6Planned issuance of substantial equity grants (600,000 time-based and 900,000 performance-based restricted shares) to ZelnickMedia, pending stockholder approval.
  • 7Amendment to company bylaws introducing an advance notice provision for stockholder proposals at annual or special meetings.

Frequently Asked Questions

The primary financial impact for Take-Two Interactive is a significant increase in the fees paid to ZelnickMedia. The monthly management fee is rising from $62,500 to $208,333 starting April 1, 2008, and the potential for annual bonuses has increased from $750,000 to $2,500,000. Additionally, significant equity grants are planned, which could dilute existing shareholders if approved by stockholders.

Strauss Zelnick is now the Executive Chairman of the Board. Ben Feder has been appointed as the Chief Executive Officer (CEO), and Karl Slatoff has been appointed as Executive Vice President. These individuals are compensated through the ZelnickMedia management agreement, with Feder and Slatoff having employment agreements with a $1 annual salary.

The equity grants, consisting of restricted stock awards (Time Based and Performance Based), are intended as part of the compensation structure for ZelnickMedia's services. The Time Based Award vests over three years, while the Performance Based Award is tied to stock price performance and the continued management agreement. These grants are contingent on shareholder approval and are designed to align ZelnickMedia's interests with long-term company performance.

The company's bylaws have been amended to include an 'advance notice provision.' This means that shareholders must provide prior written notice if they wish to bring any proposal before a vote at an annual or special meeting of stockholders. This change is intended to provide the company with more structure and notice regarding potential shareholder actions.