Business Context and Reporting Period
This Form 8-K Current Report was filed by Take-Two Interactive Software, Inc. on May 12, 2010. The filing discloses the execution of a new employment agreement with Lainie Goldstein, the Company's Chief Financial Officer, effective May 12, 2010, extending her tenure through October 31, 2012.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. It focuses exclusively on executive compensation terms.
- Base Salary: $575,000 annually until October 31, 2010; increasing to $600,000 in the second year and $625,000 in the third year.
- Annual Bonus: Eligible for up to 100% of base salary based on financial targets.
- Restricted Stock Grant: 149,193 shares to be granted on the fifth trading day following the filing of the Q2 FY2010 Form 10-Q.
- Stock Vesting: 99,462 shares vest in three equal installments based on service; 49,731 shares vest over three years subject to performance criteria.
Material Changes
The primary material change is the replacement of the prior employment agreement (dated July 16, 2007) with a new three-year contract. This agreement formalizes salary increases and defines specific equity grants and severance provisions that were not detailed in the previous summary text.
Outlook, Risks, and Contingencies
Change in Control Provisions: Upon a change in control, Ms. Goldstein is entitled to a retention bonus equal to three months' base salary at closing and another three months' base salary at the six-month anniversary, subject to continued employment. Payments are subject to reduction if excise tax provisions regarding "parachute payments" apply.
Severance Benefits: In the event of termination without cause (or resignation following certain events), the agreement provides:
- A lump sum payment of 1.5x base salary plus 1.5x target bonus (75% of base).
- A prorated target bonus for the year of termination (50% if terminated in the first half of the year; 100% if in the second half).
- Reimbursement for 18 months of COBRA health insurance coverage.
- Immediate vesting of all outstanding unvested options and restricted stock.
Restrictive Covenants: Ms. Goldstein has agreed to non-compete and non-solicitation restrictions during her employment and for one year following termination.
Investor Verification Checklist
- Verify the exact grant date of the 149,193 restricted shares, which is contingent on the filing of the Q2 FY2010 Form 10-Q.
- Review the specific financial targets required to achieve the 100% annual bonus and the performance criteria for the 49,731 performance-based shares.
- Confirm the total value of the equity grant based on the stock price on the grant date.
- Assess the potential cash outflow impact of the severance package (salary, bonus, and COBRA) in the event of a termination without cause.