What is it about greedy video game publisher executives?
Just two years ago at Electronic Arts, with only
eight months on the job as Chief Executive Officer, John
Riccitello announced a buyout of
Pandemic and Bioware studios from his former firm Elevation
Partners, of which he was one of the founders.
The purchase price looked astronomical for a developer: 840
million. To put that in perspective, Take Two
Interactive, Inc. purchased Bioshock developer Irrational Games for
11 million and Civilization publisher Firaxis for 27 million in
2006.
Today, we are learning that Pandemic Studios, one half of that
840 million dollar acquisition, is
being closed down, suggesting that the studio is worthless to
EA at this point – only two years following the deal.
According to
SEC documents, Mr. Riccitello pocketed up to 4.9 million on
that deal, and no doubt helped his fellow co-founders of Elevation
Partners walk away making a nice profit on that
deal. EA’s shareholders have been left
with the bill - and a stock that has fallen 70% since that deal was
completed.
It would be a sad statement for shareholder activism and
shareholder rights if Mr. Riccitello were to continue his tenure as
CEO of Electronic Arts without a challenge. If a
high profile chief executive essentially buys his own company, a
deal like that should be put to the highest of
standards. These results are the lowest of lows.
There has not been a single developer in the
video game industry that has been purchased for anywhere near this
deal’s 840 million dollar price tag, but the fact that it
blew up in this way only two years later is what is especially
outrageous. Mr. Riccitello ought to consider
resigning his position for committing such a blatant act of self
serving greed at the expense of EA’s shareholders.