Here is what it said:
"On April 1, 2013, Glu entered into a Change of Control Severance Agreement, with Matthew Ricchetti, Glu's President of Studios (the "Severance Agreement"). Under the Severance Agreement, if Mr. Ricchetti's employment with Glu is terminated without cause or as a result of an involuntary termination at any time within 12 months after a change of control of Glu, and Mr. Ricchetti delivers to Glu a signed general release of claims, then he will receive (A) six months of his then-current annual base salary, (B) 50% of his annual bonus for the calendar year in which the event triggering the severance occurred, based on the target potential amount (not the amount actually payable), (C) an additional 36 months of vesting with respect to each of his then-outstanding and not fully vested equity awards and (D) up to six months of continuation coverage for him (and any of his eligible dependents) pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985. In addition, the Severance Agreement requires that any successor corporation to Glu must assume the Severance Agreement."
Though severance agreements are the norm, change of control severance agreements are not. Though this could possibly be Glu Mobile being proactive, as it is a small company and likely acquisition target, a look at the Recitals section of the 8-k tells me there is more to the story than just precaution.
"A. It is expected that the Company from time to time will consider the possibility of a Change of Control (as defined below). The Board of Directors of the Company (the "Board") recognizes that such consideration can be a distraction to the Employee and can cause the Employee to consider alternative employment opportunities.
B. The Board believes that it is in the best interests of the Company and its stockholders to provide the Employee with an incentive to continue his employment and to maximize the value of the Company upon a Change of Control for the benefit of its stockholders.
C. In order to provide the Employee with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is important to provide the Employee with certain severance benefits upon the Employee's termination of employment following a Change of Control."
In the 8-K, the term "Change of Control" is defined as follows:
"Change of Control" means the closing of (i) a merger or consolidation in one transaction or a series of related transactions, in which the Company's securities held by the Company's stockholders before the merger or consolidation represent less than 50% of the outstanding voting equity securities of the surviving corporation after the transaction or series of related transactions, (ii) a sale or other transfer of all or substantially all of the Company's assets as a going concern, in one transaction or a series of related transactions, followed by the distribution to the Company's stockholders of any proceeds remaining after payment of creditors or (iii) a transfer of more than 50% of the Company's outstanding voting equity securities by the Company's stockholders to one or more related persons or entities other than the Company in one transaction or a series of related transactions. Notwithstanding the foregoing provisions of this definition, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change in control event within the meaning of Section 409A."
It looks to me like the writing is on the Wall, the long time circulating speculations, could finally be coming to fruition. The questions now are who, and at what price. In my previous articles, I posed answers to both of these questions. You can check them out here:
As a long-term investor in Glu Mobile, I hope an agreement isn't made until after earnings are released in May to truly give investors the best return on their investment. Any smart acquirer, however, will pick this company up for half the price by doing so before then. I personally hope it's Zynga (NASDAQ: ZNGA) or Facebook (NASDAQ: FB).