Take-Two Establishes Takeover Severance Packages

Take-Two Interactive has set up a contingency severance plan to protect its employees in the event of a takeover.

Documents filed with the Securities and Exchange Commission show the company has established a package which will see non-executive employees receive up to six months salary if they lose their job without cause within a year of a company takeover. Company executives will receive up to 18 months salary plus bonuses, although those figures don't apply to Strauss Zelnick, chairman of Take-Two, and other members of the top management team, as they have separate agreements in place.

Mike Hickey of analyst firm Janco Partners told Reuters the company likely took the step to calm employee fears about their future in the wake of Electronic Arts' ongoing efforts to acquire the company. "[EA's] bid probably created fairly large internal disruption and without a severance plan, employees are worried about losing their jobs," he said. "They want to keep people focused and give them some sort of support."

EA's initial attempt to buy out Take-Two was rejected by Zelnick, who claimed the offer significantly undervalued the company. He said he was willing to negotiate further with EA, but not until after the hotly anticipated Grand Theft Auto IV is released in April.