Take-Two forms severance plan in case of takeover

SAN FRANCISCO, March 7 (Reuters) - Take-Two Interactive Software Inc TTWO.O, the target of a $1.9 billion buyout offer by Electronic Arts Inc ERTS.O, said on Friday it had adopted a severance plan for employees who get fired in the event the company is bought.

The plan, adopted on March 3 and detailed in a filing with the U.S. Securities and Exchange Commission, will give executives up to 1.5 times their salary and bonus for up to 18 months if they are fired without cause within a year of a change in control.

Non-executive employees will receive up to six months’ in salary, it said.

Take-Two said the plan does not apply to Chairman Strauss Zelnick, Chief Executive Ben Feder, and other top executives covered under a separate management agreement.

Analysts said the plan was aimed at reassuring key staff that they would be taken care of in the event of a takeover by Electronic Arts.

Take-Two is gearing up to launch “Grand Theft Auto IV” on April 29 in what is widely expected to be the biggest video game debut of the year.

“The bid probably created fairly large internal disruption and without a severance plan, employees are worried about losing their jobs,” said Janco Partners analyst Mike Hickey.

“They want to keep people focused and give them some sort of support,” Hickey said.

Take-Two has rejected EA’s offer of $26 per share as too low given the expected performance of “GTAIV”. (Reporting by Scott Hillis, Editing by Toni Reinhold)