ZelnickMedia Tightens Grasp Over Take-Two Interactive

In March, 2007, a group of investors ousted Take-Two Interactive's leadership and entered into an arrangement to have ZelnickMedia run the company. Strauss Zelnick has transitioned from Non-Executive Chairman to Executive Chairman. Ben Feder, who has been a board member and acting Chief Executive Officer for Take-Two has signed a contract to serve as CEO. Also, ZelnickMedia partner Karl Slatoff was named as an Executive Vice President at Take-Two.

More importantly, the management agreement that has ZelnickMedia running the company has been extended through 2012 and the monthly fee due to ZelnickMedia has increased from $62,500 per month to $208,333 per month. Also, ZelnickMedia can receive a bonus of up to $2.5 million instead of $750,000 for its work with Take-Two. Something that particularly impacts investors is the agreement to increase the number of shares issued by Take-Two Interactive so that the company can make additional stock grants to ZelnickMedia and consultants, diluting existing stock holders. ZelnickMedia will get at least an additional award of 600,000 shares of Take Two stock.

While this changes very little of how things will work at Take-Two, it does ensure that these ZelnickMedia folk will continue to be compensated well for their work.