8-K
TAKE TWO INTERACTIVE SOFTWARE INC (TTWO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of TheSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2021
TAKE-TWO INTERACTIVE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34003 | 51-0350842 |
|---|---|---|
| (State or other<br> jurisdiction | (Commission | (IRS<br>Employer |
| of incorporation) | File<br> Number) | Identification No.) |
| 110 West 44th Street, New York, New York | 10036 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
(646) 536-2842
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value | TTWO | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item8.01 Other Events
Effective July 30, 2021, senior management and certain members of the Board of Directors of Take-Two Interactive Software, Inc. (the “Company”) will begin using the materials included in Exhibit 99.1 to this report (the “Investor Presentation”) in connection with presentations to existing shareholders of the Company.
The Investor Presentation is incorporated into this Item 8.01 by reference.
Cautionary Note Regarding Forward-Looking Statements
The statements contained in the Investor Presentationin Exhibit 99.1 which are not historical facts are considered forward-looking statements under federal securities laws and may beidentified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,”“plans,” “potential,” “predicts,” “projects,” “seeks,” “should,”“will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for the Company’sfuture business and financial performance. Such forward-looking statements are based on the current beliefs of our management as wellas assumptions made by and information currently available to them, which are subject to inherent uncertainties, risks and changes incircumstances that are difficult to predict. Actual outcomes and results may vary materially from these forward- looking statements basedon a variety of risks and uncertainties including: the uncertainty of the impact of the COVID-19 pandemic and measures taken in responsethereto; the effect that measures taken to mitigate the COVID-19 pandemic have on our operations, including our ability to timely deliverour titles and other products, and on the operations of our counterparties, including retailers and distributors; the effects of the COVID-19pandemic on consumer demand and the discretionary spending patterns of our customers, including as the situation with the pandemic continuesto evolve; the impact of reductions in interest rates by the Federal Reserve and other central banks, including on our short-term investmentportfolio; the impact of potential inflation; volatility in foreign currency exchange rates; our dependence on key management and productdevelopment personnel; our dependence on our NBA 2K and Grand Theft Auto products and our ability to develop other hit titles; our abilityto leverage opportunities on PlayStation 5 and Xbox Series X; the timely release and significant market acceptance of our games;the ability to maintain acceptable pricing levels on our games; and risks associated with international operations. Other important factorsand information are contained in the Company’s most recent Annual Report on Form 10-K, including the risks summarized in thesection entitled “Risk Factors,” and the Company’s other periodic filings with the SEC, which can be accessed at www.take2games.com.All forward-looking statements are qualified by these cautionary statements and apply only as of the date they are made. The Company undertakesno obligation to update any forward- looking statement, whether as a result of new information, future events or otherwise.
Item9.01 Financial Statements and Exhibits
(d) Exhibits:
| 99.1 | Investor presentation materials to be used beginning July 30,<br>2021. |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TAKE-TWO INTERACTIVE SOFTWARE, INC. | ||
|---|---|---|
| (Registrant) | ||
| By: | /s/ Matthew Breitman | |
| Matthew Breitman | ||
| Senior Vice President, General Counsel Americas &<br> Corporate Secretary | ||
| Date: July 30, 2021 |
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Exhibit 99.1
| TAKE-TWO INTERACTIVE<br>SOFTWARE, INC.<br>(NASDAQ: TTWO)<br>Shareholder Outreach<br>June 2021 |
|---|
| Cautionary Note: Forward-Looking Statements<br>The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws<br>and may be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “potential,” “predicts,” “projects,”<br> “seeks,” “should,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the outlook for the<br>Company’s future business and financial performance. Such forward-looking statements are based on the current beliefs of our<br>management as well as assumptions made by and information currently available to them, which are subject to inherent uncertainties, risks<br>and changes in circumstances that are difficult to predict. Actual outcomes and results may vary materially from these forward- looking<br>statements based on a variety of risks and uncertainties including: the uncertainty of the impact of the COVID-19 pandemic and measures<br>taken in response thereto; the effect that measures taken to mitigate the COVID-19 pandemic have on our operations, including our ability<br>to timely deliver our titles and other products, and on the operations of our counterparties, including retailers and distributors; the effects<br>of the COVID-19 pandemic on consumer demand and the discretionary spending patterns of our customers, including as the situation with<br>the pandemic continues to evolve; the impact of reductions in interest rates by the Federal Reserve and other central banks, including on<br>our short-term investment portfolio; the impact of potential inflation; volatility in foreign currency exchange rates; our dependence on key<br>management and product development personnel; our dependence on our NBA 2K and Grand Theft Auto products and our ability to<br>develop other hit titles; our ability to leverage opportunities on PlayStation 5 and Xbox Series X; the timely release and significant market<br>acceptance of our games; the ability to maintain acceptable pricing levels on our games; and risks associated with international<br>operations.<br>Other important factors and information are contained in the Company’s most recent Annual Report on Form 10-K, including the risks<br>summarized in the section entitled “Risk Factors,” and the Company’s other periodic filings with the SEC, which can be accessed at<br>www.take2games.com. All forward-looking statements are qualified by these cautionary statements and apply only as of the date they<br>are made. The Company undertakes no obligation to update any forward- looking statement, whether as a result of new information,<br>future events or otherwise.<br>2 |
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| XXX<br>XXX<br>XXXXX<br>Take-Two: Global Leader in Interactive Entertainment<br>CONSOLE<br>PC<br>MOBILE<br>3<br>Leading developer, publisher and marketer of interactive<br>entertainment, the strongest growth segment of the<br>entertainment industry<br>To develop the highest-<br>quality, most<br>compelling interactive<br>entertainment franchises<br>in the business and<br>deliver them on<br>platforms that are<br>relevant to our audience.<br>Our Strategy<br>CREATIVITY<br>INNOVATION<br>EFFICIENCY<br>Our Core Tenets Our Strategic Advantages to Drive Growth<br> • World-class creative teams<br> • Culture of empowering our talent to enable creative<br>expression<br> • Diverse portfolio of the highest-quality intellectual<br>properties in the business<br> • Best in class global marketing and sales distribution<br> • Leading technology, including creative tools and<br>enhanced data analytics |
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| 4<br>FY2021 Performance Update<br>-50.00%<br>-25.00%<br>0.00%<br>25.00%<br>50.00%<br>75.00%<br>100.00%<br>125.00%<br>150.00%<br>Mar-31-2018 Mar-31-2019 Mar-31-2020 Mar-31-2021<br>Peer Group<br>TTWO: Take-Two<br>ATVI: Activision Blizzard<br>EA: Electronic Arts<br>UBI: Ubisoft<br>ATVI: +44.1<br>TTWO: +84.3<br>EA: +13.6<br> • GAAP net revenue was $3.37 billion in FY2021<br>- Recurrent consumer spending increased 50% and accounted for 62% of<br>total GAAP net revenue<br> • Digitally-delivered GAAP net revenue grew 23% YoY to $2.92 billion<br>- Digitally-delivered GAAP revenue accounted for 87% of total GAAP net<br>revenue<br> • Total net bookings of $3.55 billion in FY2021<br>- Recurrent consumer spending increased 48% and accounted for 63% of<br>total net bookings<br> • GAAP net income per diluted share was $5.09 in FY2021, compared to<br>$3.54 per diluted share for FY2020<br>Key Contributors<br>Consistent Share Price Growth: 3-Year TSR Performance vs. Peers(1)<br>UBI: -6.0<br>In fiscal 2021 we enhanced Take-Two for the long term by broadening our<br>portfolio of offerings, capitalizing on diverse business models, enhancing<br>our infrastructure, and investing in our creative talent<br>(1) TSR represents period from April 2, 2018 to March 31, 2021. |
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| 5<br>World-Class Creative Teams Fundamental to Success<br>Our creative teams have continued to deliver consistently superlative entertainment<br>experiences, giving players opportunities to have fun in the most difficult of times and<br>stay connected with family and friends through shared experiences<br>The Grand Theft Auto Series<br> • One of the most successful, iconic and<br>critically acclaimed brands in all of<br>entertainment<br> • Pioneered the open-world genre<br> • Series has sold-in over 345 million units<br> • Grant Theft Auto V (GTAV) has sold over 145<br>million units to date and reached $1 billion<br>in retail sales faster than any entertainment<br>release in history<br> • GTAV is the best selling game of the decade<br>in the U.S., based on both unit and dollar<br>sales(1)<br>The Red Dead Redemption Series<br> • Series has sold-in nearly 60M units worldwide<br> • Red Dead Redemption 2 sold in over 37M<br>units<br> • Red Dead Redemption 2: 2nd best-selling<br>title in the US in the past 3 years based on<br>dollar sales(1)<br> • Red Dead Online free with every copy of Red<br>Dead Redemption 2<br> • Released standalone version of Red Dead<br>Online in December 2020<br>NBA 2K SERIES<br> • Best-Selling basketball simulation property<br>based on dollar sales and units in the US(1)<br> • Series has sold-in over 111 million units<br>worldwide<br> • NBA 2K League, The first competitive<br>gaming league jointly owned by a U.S.<br>professional sports league, debuted in May<br>2018<br> • One of the top contributors to TTWO’s<br>recurrent consumer spending<br> • Extended the franchise with NBA 2K Online<br>in China, NBA 2K Playgrounds 2, NBA 2K<br>Mobile and NBA SuperCard<br>DRAGON CITY<br> • Consistently charted in the annual top-100 grossing mobile games<br>and top-20 grossing simulation games(2)<br>TWO DOTS<br> • Downloaded 80+ million times<br> • Over 1 million Daily Active Users and 7 million Monthly Active Users<br>MONSTER LEGENDS<br> • Consistently charted in the annual top-100 grossing mobile games<br>and top-25 grossing RPG games(2)<br>(1) NPD Group.<br>(2) App Annie, iOS and Google Play combined. |
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| 3 directors<br>1 director<br>4 directors 10-14 years<br>5-9 years<br>0-4 years<br>6<br>Highly Qualified and Independent Board(1)<br>Our Board routinely reviews its composition, has taken a deliberate<br>approach to refreshment, and believes that it benefits from having a<br>diverse group of directors<br>(1) As disclosed in Take-Two’s 2020 Proxy Statement.<br>Majority Independent<br>88% independent<br>50% of the Board is<br>ethnically and/or gender diverse<br> • 25% are women<br> • 38% are ethnically diverse<br>Highly Diverse Board<br>Balancing Tenure<br>3 directors<br>added to the Board over last 4 years<br>Paul Viera<br> • Founder & CEO, Earnest<br>Partners, a global investment<br>firm<br>Susan Tolson<br> • Over 20 years of experience in<br>financial services at Capital<br>Research & Management<br>LaVerne Srinivasan<br> • VP of the National Program &<br>Program Director for<br>Education, Carnegie<br>Corporation of New York<br>Michael Sheresky<br> • Partner, United Talent Agency,<br>where he has served as a<br>motion picture talent agent<br>since June 2009<br>J Moses<br> • Over 40 years of experience in<br>video games, technology,<br>sports, entertainment, eSports<br> & sports betting<br>Roland Hernandez<br> • Former CEO, Chairman &<br>President, Telemundo Group<br>Michael Dornemann<br>Lead Independent Director<br> • Over 30 years of consulting,<br>corporate development,<br>strategic advisory & media<br>experience<br>Strauss Zelnick<br>Chairman and CEO<br> • Founder and Partner, Zelnick<br>Media Capital, a media<br>focused private equity firm |
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| 7<br>Board Composition Promotes Effective Strategic Oversight<br> Presiding at all Board of Directors meetings at which the<br>Chairman is not present;<br> Convening regular and special meetings of the independent<br>directors;<br> Developing the agenda for executive sessions of the<br>independent directors and working with the Chairman to<br>develop and approve the agenda for meetings of the full<br>Board of Directors;<br> Coordinating feedback to the Chairman on behalf of the<br>independent directors;<br> Coordinating with the Company’s Chief Legal Officer to<br>respond to shareholders who have addressed a<br>communication to the independent directors;<br> Making himself available for shareholder communication, as<br>appropriate (other independent directors may also participate<br>in such communication at times); and<br> Handling any matters concerning an actual or potential<br>conflict of interest involving any other director<br>Our directors bring a diversity of skills and experiences that are relevant to<br>our business and enable the Board to provide strong oversight and<br>effectively oversee management’s execution of strategy<br>Robust Lead Independent Director Responsibilities<br>0 1 2 3 4 5 6 7 8<br>Corporate Sustainability<br>Technology<br>Governmental Experience<br>Entertainment & Media Expertise<br>Consulting Experience<br>Leadership<br>Global Business Operations<br>Education Experience<br>Strategic Advisory<br>Market Insight<br>Governance<br>Financial & Investment Experience<br>Management of Creative Talent<br>Director Representation<br>Director Backgrounds & Expertise(1)<br>(1) As disclosed in Take-Two’s 2020 Proxy Statement. |
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| 8<br>Commitment to Sound Governance Practices<br>Our sound governance practices demonstrate the Board’s commitment to<br>strong corporate governance, effective risk management and robust<br>independent oversight<br>Our strong governance practices promote the<br>long-term interests of our shareholders The Board of Directors places a premium on, oversees and,<br>together with management, regularly participates in an<br>extensive, year-round shareholder engagement program to<br>encourage ongoing, meaningful dialogue<br>In 2020, we reached out to shareholders representing over:<br> • Discussed a diverse range of topics with our shareholders,<br>including board, governance, and executive compensation practices<br> • In response to feedback from our shareholders, we formed a<br>management committee with respect to environmental, social and<br>governance matters, which is overseen by the Corporate<br>Governance Committee<br> • Management committee has continued to evaluate and administer<br>the Company’s environmental, social and governance efforts<br> • We have also continued to enhance our disclosures related to<br>certain human capital and sustainability matters<br>69%<br>of outstanding<br>shares<br> Extensive, year-round shareholder engagement<br> Annual evaluation of the Board and its Committees<br> Annual review of Board leadership structure<br> Ongoing review and refreshment of Board composition<br> Lead Independent Director with clearly defined role and<br>responsibilities<br> Board oversight of risk management<br> Shareholder right to call special meetings<br> Shareholder right to act by written consent<br> No supermajority voting requirements<br> Strong anti-hedging, anti-pledging and insider trading policies<br> Robust Code of Business Conduct and Ethics for all directors<br>and officers<br> Independent Audit Committee, Compensation Committee and<br>Corporate Governance Committee |
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| 9<br>Executive Compensation Program Overview<br>Our executive compensation program’s design, in particular the use of<br>equity awards as a key incentive element, establishes strong links between<br>our creative teams and long-term value creation for shareholders<br>Management Agreement<br> • On November 17, 2017, we<br>entered into a new<br>Management Agreement<br>with ZelnickMedia, effective<br>January 1, 2018<br> • The Agreement emphasizes<br>performance-based, at-risk<br>compensation and equity<br>with greater than one-year<br>vesting<br> • The Board and<br>Compensation Committee<br>regularly evaluate the<br>relationship with<br>ZelnickMedia to ensure it is<br>still the appropriate<br>management structure for<br>the Company<br>Management Agreement with ZelnickMedia(1)<br>Compensation<br>Component<br>% Linked to<br>Performance<br>Delivery<br>Form<br>Performance<br>Link<br>Annual Base Fee N/A Cash N/A<br>Annual Incentive 100% Cash Adjusted EBITDA<br>Long-Term Incentive<br>(Equity Grants)<br>55% at target<br>71% at maximum<br>Time-Based<br>Awards N/A<br>Performance-<br>Based Awards<br>75% Relative TSR Performance<br>12.5% Recurrent Consumer<br>Spending Performance<br>12.5% IP Performance<br>(1) For further detail, refer to Take-Two’s proxy filed on July 24, 2020.<br>Compensation<br>Component<br>% Linked to<br>Performance<br>Delivery<br>Form<br>Performance<br>Link<br>Annual Base Salary N/A Cash N/A<br>Annual Incentive 100% Cash Adjusted EBITDA<br>Long-Term Incentive<br>(RSUs)<br>66.7% at target<br>80% at maximum<br>Time-Based<br>Awards N/A<br>Performance-<br>Based Awards Relative TSR<br>Compensation Components for Other Take-Two NEOs(1) |
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| 10<br>Highly Performance-Based Compensation Program<br>The performance-based nature of our compensation plan creates a strong<br>link between our executives’ compensation and the Company’s<br>performance<br> Annual incentives determined by<br>performance against a pre-set,<br>objective financial metric<br> Performance metric for annual<br>incentive plans is Adjusted EBITDA<br> Caps on annual incentive awards<br> Majority of compensation is<br>delivered in equity<br> Majority of long-term incentive<br>compensation is performance-<br>based<br> Vesting of performance equity is<br>based on relative TSR performance<br>and product performance<br>Design Features that Support Pay and<br>Performance Alignment<br> • Majority of pay opportunity for Take-Two’s NEOs is performance-<br>based<br> • Annual bonus opportunity is fully performance-based for all Take-<br>Two NEOs and under the ZelnickMedia management agreement<br> • Two-thirds of equity grants for Take-Two NEOs and more than half<br>of all equity grants to ZelnickMedia are performance-based<br>15%<br>12%<br>73%<br>8%<br>21%<br>71%<br>TTWO Program(1)<br>(Max Compensation)<br>ZM Agreement(2)<br>(Max Compensation)<br>Annual Base Salary<br>LTI (Time Based Awards)<br>Performance-Based Compensation (Annual<br>Incentive + LTI Performance-Based Awards)<br>Performance<br>-Based<br>Performance<br>-Based<br>(1) Based on fiscal 2020 compensation for Take-Two NEOs.<br>(2) ZelnickMedia Management Agreement, based on incentive awards granted at effective date. |
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| 11<br>Strong Compensation and Governance Practices<br> Extensive, year-round shareholder engagement<br> Annual evaluation of the Board and its Committees<br> Annual review of Board leadership structure<br> Ongoing review and refreshment of Board composition<br> Lead Independent Director with clearly defined role and<br>responsibilities<br> Board oversight of risk management<br> Shareholder right to call special meetings<br> Shareholder right to act by written consent<br> No supermajority voting requirements<br> Strong anti-hedging, anti-pledging and insider trading policies<br> Robust Code of Business Conduct and Ethics for all directors and<br>officers<br> Independent Audit Committee, Compensation Committee and<br>Corporate Governance Committee<br>Our sound compensation and governance practices demonstrate the<br>Board’s commitment to strong corporate governance, effective risk<br>management and robust independent oversight<br>Governance “Best Practices”<br> Clawback policy applicable to NEOs, including those under the<br>2017 Management Agreement with ZelnickMedia<br> Caps on annual bonuses to NEOs<br> Strong anti-hedging and anti-pledging policies<br> Double trigger acceleration of vesting on a change in control for<br>grants made under an equity plan<br> Meaningful stock ownership requirements for ZelnickMedia, other<br>NEOs and directors<br> Annual compensation risk assessment for employee plans<br> Equity incentive plan provisions that prohibit repricing of stock<br>options without shareholder approval<br> Limited perquisites<br> No tax gross ups in respect of any excise taxes on parachute<br>payments<br> Retention of independent compensation consultants by the<br>Compensation Committee<br> Balanced compensation approach between short- and long-term<br>incentive opportunities<br>Compensation “Best Practices” |
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| 12<br>Our ESG Priorities<br> • Recently formed a management committee with respect to ESG matters and engaged multiple external partners to help oversee in-depth<br>reviews of our ESG practices and develop an appropriate plan of action<br>- To ensure that sustainability considerations are incorporated into corporate strategy, future disclosures, and long-term goals to maintain<br>and advance sustainable value<br>- Management committee is overseen by the Corporate Governance Committee<br>- Committee initially to focus on the following topics: (1) Board diversity and refreshment, (2) human capital management, (3) sustainability,<br>and (4) cybersecurity<br> • Ensure that the Board continues to take a deliberate and thoughtful approach to refreshment:<br>- Three of our eight director nominees having served for five years or less<br>- All three of these recent additions are women and/or minorities<br>Board Diversity<br> & Refreshment<br>Oversight of ESG<br>We believe that focusing on corporate responsibility creates value not<br>only for our Company, but also for our shareholders and stakeholders<br> • Focus on talent retention and acquisition through initiatives such as:<br>- Job development and skills training<br>- Extensive and robust employee benefits and wellbeing programs<br>- Engagement with the leadership teams across labels to foster unique and inclusive workforce cultures<br>Human Capital<br>Management<br> • Manage the integration of environmental responsibility and sustainability into our operational and<br>product strategies<br> • Focus efforts to reduce our carbon footprint in operations by making environmentally-conscious choices<br>in our offices worldwide<br>Sustainability<br> • Continue investment of resources to guard against cyber risks and to protect data and systems<br> • Additionally, our Audit Committee regularly receives reports regarding key cyber risks including the<br>transmission of personal and confidential information<br>Cybersecurity |
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| 13<br>Increased Focus on Human Capital Management<br> • Implemented programs to make sure employees felt supported in their roles, including:<br> • Provided enhanced manager training to help strengthen teams despite the physical distance<br> • Broadened our wellness and mental health offerings<br> • Encouraged employees to step away from their screens when they could<br> • Regularly solicited feedback from employees and conducted surveys to assess areas where we can further support our talent<br> • Partnered with the leadership at our labels to foster the types of cultures our leaders believe best support and grow the creative<br>processes for their particular teams<br> • Providing support to organizations working to eradicate social and racial injustice as well as providing educational, athleti c, and<br>other opportunities to underserved communities<br> • Working with organizations to support the rights of the LGBTQIA community<br> • Increasing diversity in the industry’s talent pipeline through scholarships to minority game design students and supporting<br>organizations that bring STEM opportunities to children in underserved communities<br> • Delivering interview training and career counseling to young adults in those same communities<br> • Celebrating cultural differences through various employee affinity groups and company events and offerings<br>Diversity, Equity & Inclusion Strategy<br>Supporting Employees During COVID-19<br>One of our most important assets is our people and despite the challenges<br>of the pandemic, creativity and innovation remained the core tenets of<br>our organization |
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| THANK YOU |
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