Zelnick’s perplexing statement
I have had some time to ruminate over Take-Two chairman Strauss Zelnick’s public statement, turning down Electronic Arts’ $26 per share bid.
His statement was as follows:
“Electronic Arts’ proposal provides insufficient value to our shareholders and comes at absolutely the wrong time given the crucial initiatives under way at the company.”
What does “the wrong time” mean? Is there ever really a “wrong time”?
If someone knocks on your door and says “I’d like to buy your house for 65% more than the current market estimate,” what are the odds that your response would be ”This is the wrong time”?
If Zelnick feels that $26 per share undervalues the company, why wasn’t he beating that drum to Wall Street analysts who had hold ratings on the stock as it traded between $15 - $18? Why wasn’t Zelnick concerned about shareholder value then? Being concerned about shareholder value should be Zelnick’s full-time job, not just when an acquisition offer arises. Could it be that Zelnick wanted to accumulate a large pile of stock options with low trigger prices while the stock lingered at low prices?
Looking back at Hank Greenberg’s analysis of Zelnick’s compensation package, it becomes obvious that “the wrong time” most likely refers solely to Zelnick, not the company. EA’s offer potentially negates a large portion of the proposed compensation package Zelnick is to receive in the upcoming annual meeting.
If I’m a shareholder who bought at $15 or $18 or $12.25, the timing of Electronic Arts’ cash offer of $26 per share is perfect. Absolutely perfect.
For more on Zelnick and his rich compensation manuever, click here for The New York Times piece, and click here for The Wall Street Journal piece.
