Take-Two Interactive Shareholder Revolt

In the investor relations and governance circles (two business topics I cover), there's been lots of talk about activist shareholders. But at Take-Two Interactive Software, maker of the Grand Theft Auto series of video games, we're seeing an investor auto de fe. According to the Wall Street Journal:

The investor group -- comprising OppenheimerFunds Inc., D.E. Shaw Valence Portfolios LLC, Tudor Investment Corp. and Steven A. Cohen's S.A.C. Capital Management LLC -- will nominate six people to Take-Two's board at the company's annual meeting March 23 according to a Securities and Exchange Commission filing.

That means replacing the majority of the board. And a New York Times story reports that the investors are looking to replace the board's chair and the CEO and CFO as well. The former chief executive a few weeks ago "pleaded guilty to falsifying records in a stock option backdating scheme," again according to the New York Times. According to a variety of experts quoted, the company will still face enormous problems because growth will mean breaking out of the car chase rat race. If the Times was correct, then Take-Two's board was taken by surprise and is still deciding what to do.

A bigger question, though, is whether this will remain an isolated incident, or if institutional investors are getting so fed up with some companies that they're more wiling to take extraordinary measures. It would seem unlikely - they don't want to spend the time and I'd think are more likely to shift their money to other investments - but performing such an action once does make it easier to consider again. That's got to leave a lot of directors unnerved.