Employee Retention of Take-Two Interactive -
April 20th, 2011
Take-Two Interactive Software, Inc. (NASDAQ: TTWO) (or Take-Two, also known as Take2) is an American publisher, developer, and distributor of video games and video game peripherals. Take-Two wholly owns 2K Games and Rockstar Games. The company's headquarters are in New York City, with international headquarters in Windsor, United Kingdom. Development studio locations include San Diego, Vancouver, Toronto and Novato, California. Take-Two has developed and published many notable games, including its most famous Grand Theft Auto series, the Midnight Club racing series, controversial games Manhunt and Manhunt 2 and most recently BioShock. As owner of 2K Games, Take-Two publishes its popular 2K Sports titles. It also acted as the publisher of Bethesda Softworks's 2006 game, The Elder Scrolls IV: Oblivion. Take-Two was the target of a hostile takeover US$2 billion bid from rival Electronic Arts issued in February 2008. EA let the offer expire in August 2008.
Take-Two Interactive tonight disclosed an email they sent out to their employees about a change in their severance plan which was triggered, it appears, by Electronic Arts offer to buy them out.
The "Change in Control Employee Severance Plan" will give "minimum levels of compensation" to all employees in the event that they are fired as a result of a change in control of the company. While Take-Two goes to some lengths to point out that this has nothing to do with the possibility of a buy-out, they also note that the plan was created to address the "understandable concerns" that some employees have about the possibility of an EA buy-out.
Last week we informed you of EA's unsolicited proposal to acquire Take-Two, which our Board rejected. Although there is no update on the proposal, we have been working to substantively address the understandable concerns that some of you may have as a result of the proposal. Therefore, we have established a formal severance plan for the benefit of our employees, and are publicly announcing that plan today.
Please note: we are not assuming that any change in control will occur or, if there were a change, that any positions would be affected.
Our "Change in Control Employee Severance Plan" provides for minimum levels of compensation for all employees in the event that an employee's position is terminated as a result of a change in control of the Company. These types of plans are fairly common for publicly traded companies. In fact, both Electronic Arts and THQ have change in control severance plans. If you have any questions about our plan, please speak with your manager, local HR director or Courtney Kelley.
We hope that this benefit will alleviate some of the concerns you may have, and allow you to remain fully focused on your responsibilities. You are critical to the success of Take-Two. The most important contribution each of us can make during this period is doing our jobs with the same focus, skill and creativity we always have.
We remain committed to open communication with all of you, and will continue to update you when and as we can.
Creativity is at an all-time high at Take-Two — this is an incredibly exciting time for all of us and also for our customers who depend on us for cutting-edge innovation and the industry's most exciting games. We know we won't disappoint.
In response to the potential acquisition of the Company by Electronic Arts Inc. announced in February 2008, the Compensation Committee, in March 2008, approved a "double-trigger" change of control plan, entitled the Take-Two Interactive Software, Inc. Change in Control Employee Severance Plan (the "CIC Severance Plan"). Pursuant to the CIC Severance Plan, any eligible employee, including the Named Executive Officers (other than Mr. Feder), may receive certain benefits if his or her employment is terminated either without cause or if he or she resigns for good reason during the 12-month period following a "change in control" (as defined in the CIC Severance Plan) of the Company.
The benefits that the Named Executive Officers are entitled to receive upon a qualifying termination of employment under the CIC Severance Plan are:
a cash severance payment equal to 150% of the sum of the Named Executive Officer's annual base salary and target annual bonus or incentive opportunity;
continued health benefits for a period of 18 months; and
full and immediate vesting of all outstanding and unvested equity awards.
As the Named Executive Officers eligible to receive benefits under the CIC Severance Plan have employment agreements that provide for severance benefits, they will receive, on a benefit-by-benefit basis, the greater of the benefits under the CIC Severance Plan and the benefits under their employment agreement.
We believe that this level of severance benefits will assist us in recruiting talented individuals to join and remain a part of our management team. From time to time, we may recruit executives from other companies where they have job security, tenure and career opportunities. In accepting a position with us, an executive often is giving up his or her current job stability for the challenges and potential risks of a new position. This severance benefit mitigates the harm that the executive would suffer if he or she were terminated by the Company for reasons beyond his or her control in conjunction with a change of control of the Company.
Last edited by pratikkk; April 20th, 2011 at 02:21 PM..