So it turns out that on his second acquisition of Bioware and Pandemic, Electronic Arts (ERTS) CEO John Riccitiello stands to personally make $4.9 million.
As noted earlier, EA is buying VG Holding, parent of video game companies Bioware and Pandemic, for up to $620 million in cash, plus up to another $155 million in equity. The seller is Elevation Partners, an investment firm where Riccitiello had been a partner; he lead Elevation’s investment in the two companies in 2005, in what was Elevation’s first deal.
In an 8-K filing with the SEC, Electronic Arts notes that Riccitiello had been CEO of VG Holding, and that he continues to hold an indirect interest in the company through his holdings in Elevation Partners.
As a result of the Merger, Mr. Riccitiello’s financial returns related to these interests, including returns of deemed capital contributions, could be up to $4.9 million at the time of partnership distributions in the future, if any. This amount could be reduced, however, by a variety of factors, including investment losses of Elevation, if any, as well as certain expenses of Elevation that could offset partnership profits. Upon his separation from Elevation, Mr. Riccitiello ceased to have any further control or influence over these factors.
The company says in the filing that EA’s Audit Committee engaged directly with EA management (independently from Riccitiello) to analyze and consider the potential benefits, risks and terms of the deal.
EA says Riccitiello recused himself from the Board meeting during which it deliberated on the deal, and that he did not vote.