Kotaku
GTA IV is complete and in production; the trucks are set to begin shipments to retail. This is just one item of positive news that Take-Two's executives touted at their annual shareholder meeting.
On the table? In addition to a reinstatement of the board, that controversial compensation package to executives, through which Strauss Zelnick's ZelnickMedia stood to see their monthly pay go up from $62,500 to $208,333. The compensation package also includes a bumped up annual bonus, from $750,000 to $2,500,000 per year, and 600,000 shares of common stock that the management also gets as part of the same compensation boost. Only investors who bought shares before February 19th were able to submit ballots on these issues.
Even chairman Strauss Zelnick acknowledged, though, that what most of the stockholders really wanted to hear about was EA. And he held little back in a spirited attempt to convince shareholders that, at least for the moment, they were better off not selling.
Hit the jump for Kotaku's full coverage of what went down in the meeting.
Take -Two opened with a video presentation that chairman Strauss Zelnick said would demonstrate the breadth and quality of Take Two's products, the depth of its portfolio and the strength of its staff. Given that Take-Two aims to convince its shareholders it can maintain a share price over the $26 they've been offered by EA, it's not surprising that he'd open with a focus on the positives. We couldn't see exactly what the presentation contained, listening in on an audio-only feed — all we could hear was some amped-up guitar music, the kind you'd expect to hear overlaying a montage.
Following the video, CEO Ben Feder continued on the upbeat note. "We've made significant progress over the past year on all fronts," he began, praising the progress of the company's turnaround initiatives announced this time last year. Federer said the reorganization in place, including a $25 million cost reduction initiative, is going well, and reminded attendees that the company's now backed with a credit facility to ensure stability.
"We're very pleased that we've broadened our product lineup across all genres, platforms and demographics," Feder said, and expressed confidence at the company's "robust" lineup for the coming years. On GTA's upcoming launch, Feder confirmed the game is complete and in production. "GTA... is our most profitable and biggest-selling franchise. Retail preorders for GTA IV are ahead of our initial expectations, which suggests that the launch of GTA could be defining for our company and for the entertainment industry."
Federer also promised releases beyond GTA held strong potential. He mentioned the upcoming Midnight Club, which as a franchise has sold 12 million units to date, Sid Meier's Civilizations Revolution, the 8 million-selling franchise's console debut, and the follow-up to BioShock slated to release in 2009.
In addition to praising the performance of Carnival Games, Feder called Take-Two's stable of sports titles one of its highest achievements, and expects, based on all these strengths, for Take-Two to turn a profit this year, rounding out the positive tone by expressing confidence in the Asian expansion initiative announced earlier this week.
Zelnick reclaimed the floor, reiterating what he's been saying all along regarding EA's offer: "The Board and management of Take-Two strongly believe.. that EA's offer is still at the wrong place, and still at the wrong time."
He cited "one of the strongest porfolios of intellectual properties in the business," Take-Two's suite of 17 development houses including Rockstar, 2k, 2k Sports and 2k Play, and a staff of 1400 developers altogether, and said Take-Two has 30 titles with sales of 1 million units or better — and, claimed the highest-rated titles of all third-party publishers including EA.
He called EA's bid "highly opportunistic," stating, "We believe EA's decision to pursue a hostile process instead of a cooperative one is strong evidence they're trying to lock in value at the expense of [stockholders]."
Added Zelnick, "The offer also fails to take note of... positive results we're seeing from turnaround initiatives that are well underway. EA's timing was specifically designed to capture the benefit of those initiatives before they became apparent and reflected in our stock price. We've become a much more efficient company. We believe we're a much better-managed company. We're a rational company; we make rational decisions. We have a lot of hard-working, dedicated, talented people."
Specifically, he focused on 2K Sports, saying that head-to-head, 2k beats EA on every metric for sports titles. "EA's offer doesn't remotely compensate stockholders for the value of the sports business to EA," Zelnick stressed.
Zelnick's voice took on a tone of urgency, and the audio picked up what sounded like him striking the table to punctuate his speech. "Take-Two is worth more than $26 per share — and I'm being moderate because I have lawyers in here. The board believes it's worth more than $26 a share. I urge stockholders not to tender shares at this price."
However, he made it clear the door is open to negotiations in the future: "That said, I want to emphasize — this is crucial. The board of Take-Two, the management of Take-Two is one hundred percent, absolutely committed to doing the right thing by stockholders and to create value at this company. The results... are only going to get better."
He said the board would consider all its options — including remaining independent — but that the company is prepared to begin formal discussions with interested parties on April 30th. He again said that Take-Two has received "numerous indications of interest from third parties," and that they continue to receive inquiries — though when asked, Zelnick would not disclose whether he'd entered into any kind of confidentiality agreement that would protect such discussions.
Finally, Zelnick noted that both Take-Two and EA are cooperating with the FTC on its investigation of possible antitrust violations surrounding the proposed transactions, and he refused to speculate on what areas in specific the FTC might be scrutinizing the most closely.
Comments
Well done Take-Two stick it to the man!
Gah, I want to know what was being is played over the riff; this whole fiasco is gamepolitics 101 to me and it is GREAT.
@Communist_Gamer:
yeah, I'd much rather see T2 crash and brun, taking GTA with them, than give them access to some actual economic force.
Hopefully GTAIV sells so well that EA cannot afford Take-Two.
Yes... stick it to the man, T2. Stick it to the company that can actually clean you up and maybe get some semblance of a decent production team in there.
Yeah, rebel for the sake of rebelling... or getting filthy stinking rich.
Whichever works for you.
@ZinkO: The Game (the kind you just lost):
you must feel lonely...
Like I said, business types are worthless.
How much did this dbag have to do with getting GTA4 out the door?
@M. Lobo:
wow, you made an inaccurate statement about my emotional state from 1 line of text. Amazing.
T2 isn't doing anything to help T2, its doing everything to help the management team. EA's bid is the highest because T2 is more valuable to EA than anyone else. But an EA takeover means less money for T2 management so T2 management is looking for another deal worse for teh stockholders but that would still allow a management payoff.
Thanks for the read.This has been very informative.I think it's going to happen one way or the other.I think they will hold out till after GTA4's release,but EA is going to get the 51%.
Why the hell did this hype me up even more for GTA IV?
@ninjadan: I never thought Take-Two needed cleaning up as their games are great and they pay attention to what their fans are saying.
Uh, I think they want to wait to see how well GTA does, then assess the company's value and re-negotiate.
Also, to the guy who said they need access to EA's cash - GTA is slated to make almost half a billion dollars in sales in the week. How much money do they really need access to?
The stick it to the man thing @ZinkO: The Game (the kind you just lost): was actually a joke, considering that I hate the stock market. :P
@endaround:
No.
Lets start, first in the event Take 2 was brought up that means A LOT of jobs would be lost, starting with the entire distribution network since EA already have one and a very fine one at that.
But hey, you get 26 bunks for share ... why give a damn for the people that will lost the job ... right?
Either way the hard working employees of Take Two get the short end of the stick.
Zelnick: "Thanks everyone for a stellar record breaking year. To celebrate I'd like to give you all a round of a applause, this pen of appreciation, and my self a raise. No need to thank me, you've earned!"
Isn't it a shame it's not the customers that matter most instead of the shareholders. I don't feel I get a fair price, or any price, for my loyalty and business.
@vincevl:
Welcome to my world. Comrade.
Let's clear up some inaccuracies here!
@Communist_Gamer: Take-Two is hardly an underdog. Compared to EA, maybe, but in general? Are you serious?
@ZinkO: The Game (the kind you just lost): Take-Two is hardly in financial trouble. Perhaps you were thinking of Midway?
Still, I think this is all a matter of "when" and not "if." Is someone out there interested in building a time machine? We need to bring Teddy Roosevelt to the present to busts some trusts up.
EA is greeeeeeedy!:P
How long now before someone gets an advance copy of GTAIV and post footage of it online? I give it 5 days or so.
Oh, I just saw that you were being ironic, Communist_Gamer, and now I feel dumb. Lulz. :)
I get chills up my spine every time read the words "Take-Two" and "EA" in the same article.
@endaround: Couldn't agree more. The current management is only looking out for themselves and not the shareholders. Expect them to take huge bonuses if GTA4 sells well.
@IGoogledMurder:
Like I said a bit afterwards, there was sarcasm to my "stick it to the man" comment.
@DigitalHero:
Wahahahahaahahahahahaahaahahahahahahahhhah......haaaaaaa......that was funny.
If I recall correctly, didn't Take-Two refuse to let EA take a look at their books? If so, then why are is management getting so upset about EA's low offer? If EA is undervaluing the company, why not let them get the information they need so they can make a better offer? Of course this is all moot if Take-Two's argument is bullshit and they just want to keep control of the company for their own benefit.
Oh and because I didn't get to say it before, welcome to Kotaku Leigh. I always enjoy your work and look forward to seeing more of it in the future.
@vincevl: If you feel that way then buy stock. It's really easy and if you even buy ONE share you get a say in what that company is going to do. By buying shares in a company you trust you are making that company stronger. It is a risk and something that you may want to talk to someone first about but you never know. I bought Sony stock when I was 18 because I really liked what the company did with the PS2. It's paid off but maybe I got lucky. I didn't make a KILLING or anything but I have made a little cash. I'm holding on to it for a rainy day. Or when I can't afford the PS4.
@IGoogledMurder:
well, they ain't no Atari, but they aren't exactly thriving, are they?
also, technically, Taft busted more trusts than Roosevelt. I get laughs imagining that as an anime move- "TRUSTU-BUSTERO GO!"
Good job, TakeTwo. The shareholders just need a to wait it out with a bit more patience, and they'll soon reap the rewards.
@ZinkO: The Game (the kind you just lost): Well, you didn't give the rationale for your sentiments, so what did you expect, cupcake?
@Jest:
cake > cupcake.
I'm just seeing this as more of a play by T2's management than an actual good business move.
@ZinkO: The Game (the kind you just lost): Yea, I can see that as well. I'm just somewhat optimistic that, in the end (after GTAIV release into the market), the shareholders will see it was better off for them to stay put. Although, who knows how it'll all pan out, which is why I look forward to the coming months.
One could say a lot of negative things about things on the managment at take two in the past. But they did numerous things to reduce issues and even besides their problems they managed to keep some great teams together and get some wicked games out, so more power to them.
A takeover always *could* have positive results for all sides at the end (besides the usual common bunch that looses the job a while after the takeover..) but yeah,its more likely that the takeover will have more negative effects than positive ones on the taken over company and in these dimensions on the whole industry.
Also i think the big players in the indurstry like EA and ActiBlizzard are big enough as they are,i don´t see it as positive that it gets allowed that they suck up more and more other studios so i´m curious to see how that FTC thing pans out.
And yes, to actually say something on this great post itself i agree with the take2 board people in their statement that EA´s per share offer is actually low when you don´t just look at the narrow price of the actual price of a share of take two right now but instead look at the broader picture of titles they have in the works or close to release and even way more when you consider that with take two sports gone EA would have a quasi monopole in the sports game market, that point alone is worth lots of money.
Reason i don't want EA to buy out Take-Two
there will be MORE GTA "Mods" aka Vice City, San Andreas a year.
2kSports Nuff Said.
and i don't want Bioshock anywhere near EA Developers.
@ninjadan: Have you actually payed attention to the last couple years T2 has had?
While I like the fact that Take 2 is trying to hold off the EA buy out, I'm throughly pissed at what Zelnick was able to get them to pass. That bump in his earnings, that is some bull shit. If I were an investor, regardless of how well the company is doing, his ass does not need to get that much more money.
Feed that into the company to stay out of the red.
I <3 Leigh Alexander. Long almost-geeky business posts <33!!
Everyone saying "LOL TAKE-TWO HAS BEEN DOING GREAT IN THE LAST FEW YEARS ^___^" needs to realize EA does more than release new versions of games every year. They have ALOT of games that DON'T follow that formula, such as Burnout.
Honestly, I think people confuse EA and Activision.
TONY HAWK 10. GUITAR HERO: DS 2: ROCKS THE AEROSMITH DURING THE 80's.
@endaround:
EA's deal is the only public deal. We don't know about the private discussions with the other interested parties yet. So we don't know if EA's deal is the best one or not.
EA made this a hostile takeover because they did not want to wait until after GTA4 was released to start negotiations in private. That is what started this whole thing.
If EA really believed that its offer was superior and accurately reflected the value of Take Two then they would have waited. They don't want to wait because they know that after GTA4 is released Take Two is going to be worth more.
he's fighting for a good cause. bravo
It's nice to see some competition in the industry.
I really don't see how having EA as the sole big name publisher could be anything positive for gamers. With companies like ActiBlizzard and Take2 on the field, there's at least reason for them to strive to make their games better.
I really dislike the idea of having Medal of Honor as the sole combat FPS series.
Other Interested Third Parties? makes me think Midway for some reason...
Now we wait and see what happens next!
I really wish I could've been there to see this speech, it sounded pretty good to me.
I feel such pride in this company...
My mother used to own her own flower shop in the nearby plaza. Country Florist it was called. It was her pride and joy, she was a nurse before hand and it was very hard on her physically and mentally. She always wanted to be her own boss and work with something she loves, Flowers.
Then Dominion opened up a flower shop in their nearby store. My mom's business went under and my family was bankrupt. I never had a video game system as a child, I would experience games only at my friends houses.
I got my psx when I first started my paper route, but I digress.
I cant help but feel that if they lose independence to EA it will be like my mom losing her flower shop.
I hope the stockholders can see the value in what is a truly great company.
In the end, if Take 2 can make a large cash payout to stockholders by sticking around until a temporary increase in price (like after release of GTA--or possibly even later down the line), and Zelnick gets away clean with the pay raise, ultimately, the tendrils of hardcore business will see it as a positive sign, and we may ultimately see more effort put into positive press on gaming and game playing, for the simple reason that it will hold a lure for the purely mercenary and talented, as well as the truly dedicated and lucky.
I'm not saying Will Wright is all luck and no talent, but mature industries have a place for people who are primarily interested in success, and secondarily interested in quote spiritual fullfillment, unquote. People can be surprisingly karma positive in an environment saturated with cash money. I cite the Brady Bunch. For most couples, managing an unweildy family of 8 including the family pet, Alice, which is composed of two divorce(accent mark goes here)s, and imprisoned in a oubliette of brown, tan, and lime, is an act of true grit. Especially considering that nobody (except Alice), ever got any lovin' on that show. (amirite? yes.)
And she got it from a Butcher who loved her for her resemblance to a flank steak riding a pair of ham hocks.
Inject the imaginary architect's income into the situation, such that somebody has the time and wherewithal to maintain the lawn to within an inch of its life, such that it appears to the human eye to be astroturf, and suddenly, this unweildy domestic ark appears to be totally doable.
What I'm saying here is that if T2I builds it, and by it, I mean a nice little corrupt tit for a business major to suck on like a Miltonesque parasite, then they, by which I mean talented sharklike entities responsible for making the music industry into the completely available and comprehensively demographic conscious entity that *it* is, will come.
And by come, I mean, get a towel, game industry.