Karl Winters, the Chief Financial Officer of Take-Two Interactive, has resigned amid a Securities and Exchange Commission investigation into whether Take-Two failed to properly disclose backdated stock options.
Lainie Goldstein, Senior Vice-Present of Finance, has taken over as interim chief financial officer until a permanent replacement can be found.
Although not illegal, the process of backdating stock options does require a company to follow strict procedures to ensure, among other things, that all stockholders are fully informed regarding the practice. Backdating allows holders to exercise their stock options at values lower than than that of their actual issue date, thereby inflating the value of the options.
Along with questions regarding the stock options, there has been discontent among shareholders regarding Take-Two’s financial performance, and Winters’ exit was not unexpected. Prior to his resignation, several other members of Take-Two’s board of directors, including the CEO, had been removed as a result of the company’s poor performance.
Take-Two Interactive produces and publishes games for the console and PC markets under various labels, but is best known for the Grand Theft Auto series, developed by its Rockstar Games subsidiary. The series has been massively successful, with sales of tens of millions of units across various platforms, but it continues to be a magnet for controversy due to its violent content, and analysts have stated that Take-Two needs to find another, comparably successful title in order to improve its position in the industry.