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Take-Two Interactive chairman Strauss Zelnick and president Karl Slatoff are taking $43 million for their management fund ZMC despite laying off 5 percent of the company’s workforce.
In a recent letter to shareholders, Zelnick waxed lyrical of the “tremendous growth” expected over the next few years – with Grand Theft Auto VI responsible for much of that. What is concerning about this is that after 550 staff members sacked and $460m spent on Gearbox, Zelnick and Slatoff also earned a $25m ‘performance-based bonus’ for their management fund ZMC.
This was detailed in the same report that Zelnick’s letter prefaced. “During fiscal 2024, in accordance with the 2022 Management Agreement, ZMC earned an annual management fee [of $3.3m], had the opportunity to receive an annual performance-based incentive [of $2.8m], the payment of which is linked solely to an objective company performance measure, and received a long-term incentive equity grant in a combination of performance-based vesting RSUs [of $25m] and time-based vesting RSUs [of $12.4m].”
It’s important to note that the RSUs (restricted stock units) will require several years before they can be vested. Furthermore, had Take-Two performed even better, ZMC would have been set to receive $79.2m instead.
In February this year, Strauss Zelnick told IGN that Take-Two had “no current plans” for mass layoffs and that it hadn’t “put any meat on the bones of that yet.” The next month, Take-Two acquired Borderlands studio Gearbox for $460m. This was then followed by mass layoffs less than three weeks later as 550 people were made redundant, after which the corporation expected to save up to $165m.
These layoffs took place just ten days after the fiscal year ended – the same fiscal year that saw ZMC take home $25m worth of ‘performance-based’ RSUs – though plans have been spoken about since at least February this year.
Zelnick also pointed out that Take-Two’s biggest expense is marketing, which it can ‘optimise.’ Interestingly, its next steps after this were to tease the closures of Roll7, which has been called an “insulting rug pull.”
The 2022 Management Agreement states that “Mr. Zelnick may not receive more than 60% of the aggregate compensation paid to ZMC and Mr. Slatoff may not receive more than 40% of the aggregate compensation paid to ZMC.” Both are also paid a $1 annual salary by Take Two Interactive, sneakily entitling them to “certain and other plan benefits.”
ZMC is a “leading investor in and operator of media,, entertainment, communications, and technology businesses.” The firm is primarily responsible for Take-Two’s executive management.
Some of my favourite elements in the Grand Theft Auto franchise are its satirical digs at corporate moguls such as Zelnick and Slatoff. The irony is not lost on me, either.
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