Take-Two Shareholder Files Suit Against Board Members

Electronic Arts' takeover attempt on Take-Two Interactive has caused a lawsuit to come out against the Grand Theft Auto publisher. The lawsuit, which was filed by shareholder Patrick Solomon, alleges that the company's executives rejected an undisclosed takeover offer from EA and then set themselves up for hefty stock payoffs should the company be sold later on.

The suit names Take-Two Executive Chairman Strauss Zelnick and Chief Executive Benjamin Feder, partners of investment company ZelnickMedia which took over the company in March 2007 as part of a boardroom coup. The pair's placement as part of the investment company comes under scrutiny because the board decided on February 15th to raise the management fees of ZelnickMedia to $16.5 million, up from $3.8 million, should the company be sold. On top of that, the suit also points to a provision that is up for shareholder approval next month. The provision of interest, should it be passed, would grant the investment firm 780,000 shares if the company were sold before March 31, 2009 and 1.5 million shares if Take-Two was sold after March 31, 2009. At $26 a share, the price EA offered, the bonus would be worth between $20 million and $39 million.

Many shareholders sues, but this one just makes me happy that someone is trying to stand up to the board for potentially screwing people over in an attempt to line their own pockets.