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Software maker determines that its compensation committee ''abdicated its option granting responsibilities'' and permitted Ryan Brant ''to control and dominate the granting process.''
Stephen Taub, CFO.com | US
January 22, 2007
Take-Two Interactive Software, which last month disclosed that it would restate 10 years of results due to incorrect reported dates for option grants and "improprieties" in the options-granting process, has pinned its troubles on company founder Ryan Brant.
According to a regulatory filing, a Take-Two special committee determined that the company's compensation committee "abdicated its option granting responsibilities" and permitted Brant "to control and dominate the granting process."
The video-game maker, best-known for its blockbuster "Grand Theft Auto" series, elaborated that between April 1997 and August 2003, Brant "engaged in a pattern and practice of backdating options." During the period, "a significant number of option grants appear to have been backdated." Take-Two's filing added, however, that the special committee uncovered no such irregularities since that time.
"The company, in granting options, failed in many cases to comply with the terms of its stock option plans, did not maintain adequate control and compliance procedures for option grants, and did not generate or maintain adequate or appropriate documentation of such grants," stated the filing.
Brant, who served as chief executive officer until February 2001 and as chairman until March 2004, resigned from the company as vice president of production, a non-executive position, last October. He could not immediately be reached for comment.
Take-Two's filing also stressed that it found to evidence to suggest that current CEO Paul Eibeler or CFO Karl Winters engaged in any conduct that would raise concerns about the reliability of their representations to auditors, nor did it uncover evidence that Eibeler or Winters engaged in any options-related misconduct. In addition, the special committee found no evidence to suggest that Oliver Grace and Robert Flug, former members of the compensation committee and current members of the board, "engaged in willful misconduct or other dishonest acts."
Take-Two also disclosed that two former CFOs and a former controller who appeared to have had significant involvement in the options-granting process — but who were not named in the filing — declined to be interviewed by the law firm that served as counsel to the special committee. This "necessarily limited" the information that the law firm was able to collect, the company added.