New Take-Two details revealed

A recent filing based on an amendment to the agreement between the Take-Two board and ZelnickMedia, the company owned by executive chairman Strauss Zelnick, has highlighted some interesting changes in light of the offer by Electronic Arts to acquire the company.

In the amendment, dated February 14, 2008, under the heading of "Time Based Award", ZelnickMedia is in line to receive 600,000 shares of common stock, set to vest in equal amounts over a three year period.

However, the filing reads that "in the event of a Change in Control all unvested shares of restricted stock under the Time Based Award will vest in full immediately prior to the consummation of such Change in Control," landing ZelnickMedia with a payout of USD 15.6 million at USD 26 per share.

The filing then goes on to stipulate that in the event of an indication of interest from a third party prior to the effective date of February 14, than award won't apply - the first offer from EA was made on February 6 and rejected on February 15 according to EA chief John Riccitiello.

There's an additional clause in the filing which also points to a 900,000 share award based on performance, to be spread out over four years and relating to the company's share price achieving certain levels of value.

Similar conditions apply regarding a change in control of the company, including a 180,000 immediate vesting in that situation, although it's expected the company wouldn't fulfil the stock value criteria in time before any EA takeover occurred.

The amendment is due to be ratified at the next company annual meeting of stockholders, taking place on March 30, and includes clauses which increase the annual management fee that Take-Two pays to ZelnickMedia from USD 62,500 to USD 208,333 - as well as an increase in the maximum annual bonus payable from USD 750,000 to a possible USD 2.5 million.

Speculation as to the precise motives for the timing of the agreement is mixed, with some commentators critical of the move and others offering a different view.

Zelnick has stated that he won't discuss any further offer until April 30, the day after the company's flagship title, Grand Theft Auto IV, is released.

It should also be noted that so-called 'golden parachute' deals are common practice in the event of company takeovers.