Take-Two Shareholders Stage Successful Board Coup

Eddy Elfenbein submits: Good for them.

A group of Take-Two Interactive Software Inc. (TTWO) shareholders owning 46.1% of the videogame maker's stock succeeded in removing the board and replacing it with six new directors.

The newly elected board already nominated as chairman Strauss Zelnick, founder of media management and investment firm ZelnickMedia. The board also named Benjamin Feder as acting chief executive, succeeding former CEO Paul Eibeler, and increased the number of board seats to seven from six in order to reappoint the just-ousted Grover Brown as the seventh director.

The board coup is the handiwork of four institutional shareholders, a class of investors not known for activist investing or agitating for change at companies to boost the stock price. The group consists of mutual-fund firm OppenheimerFunds Inc., D.E. Shaw Valence Portfolios LLC, Tudor Investment Corp. and hedge fund S.A.C. Capital.

The upheaval comes as the maker of "Grand Theft Auto" videogames struggles to rebound from a stock-options scandal and return its operations to profitability. Earlier this year, former Chairman and Chief Executive Ryan Brant pleaded guilty to charges in connection with an options-backdating scheme.

Despite the victory, Take-Two is still an unimpressive stock. But I'm happy to see shareholders beat management. Ideally, this should happen much more often than it does. Shareholders are owners, and should be treated as such. It's unfortunate that it took such a dismal performance to bring this about.

TTWO 1-yr chart