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Proxy-less Proxy Fight at Take-Two

Rather than mailing out the typical paperwork to shareholders, an investor group plans simply to show up and nominate director candidates in person.
Stephen Taub, CFO.com | US
March 26, 2007

A number of newly powerful shareholders of Take-Two Interactive Software, the company best-known for its blockbuster "Grand Theft Auto" series of video games, are teaming up for a relatively unusual board election at the company's annual meeting this Thursday.

Rather than mailing out proxy materials to shareholders, the investor group — including hedge fund giants D.E. Shaw, SAC Capital, and Tudor Investment, as well as Oppenheimer Funds — plans simply to show up and propose their candidates in person.

Since Take-Two has not adopted majority voting, the dissident slate would need only to receive more votes than the sitting directors — and with 46 percent of the shares, the investor group seems likely to prevail. Their campaign received an added boost recently, when two proxy research firms recommended that shareholders withhold their votes from several company nominees.

"It cements the deal," Michael Pachter, an analyst at Wedbush Morgan Securities, told the Associated Press. "It means that this board is gone." A Take-Two spokesman declined comment to the wire service.

The AP reported that Institutional Shareholder Services recommended withholding votes for Oliver R. Grace, Robert Flug, and Mark Lewis over compensation concerns, including their failure to prevent backdating of stock options by Take-Two founder and former chief executive officer Ryan Brant.

Proxy Governance has reportedly recommended withholding votes from Grace, Flug, Lewis, and current chief executive Paul Eibeler. According to the wire service, Proxy Governance cited declining financial performance, management turnover, and backdating of stock options as reasons for its recommendation.

In an earlier statement, the investor group affirmed that if successful in its board campaign, it plans to replace Eibeler as CEO and review the employment status of (read: possibly fire) chief financial officer Karl Winters.




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