Earlier Friday, Zelnick said he met with the company's employees to discuss his plans for the company. One of the first orders of business will be to work on compliance issues and put regulatory concerns to rest, he said.
Zelnick hopes to have a detailed turnaround plan within three to six months.
"I think actually cleaning up the corporate side of the equation will allow the company's creative folks to do what they do best without distraction and I believe hits will come out of that," he said. "When you run a company with integrity, creative people do their very best work."
At Thursday's annual meeting, a shareholder revolt put a new CEO and several board members in charge of the company.
Reversing Recent Lapses
Financial analysts and child advocates have said only a thorough purging at the top would reverse the accounting and ethical lapses at the publisher of the popular, murder-your-way-to-victory video game "Grand Theft Auto."
"If you look at the content of what these guys have distributed, it's so offensive and inappropriate. It's not surprising to learn they had committed massive acts of fraud at the board and CEO level," said James Steyer, CEO and founder of San Francisco-based multimedia ratings group Common Sense Media, a nonprofit that rates video games and other content for violence and other factors. "The chickens have come home to roost for this company - and I say good riddance to these guys."
The investor group that led the ouster included Oppenheimer Funds and DE Shaw Valence Portfolios, which together control nearly half of the company's shares and announced in early March they would nominate and vote for new directors at the Take-Two's annual meeting, held Thursday in New York.
Zelnick, former chief executive of BMG Entertainment, which became part of Sony in 2004, is the company's new non-executive chairman.
Paul Eibeler, who lost his bid for re-election to the board, was stripped of his titles as CEO and president. He was replaced by Ben Feder, formerly a senior executive at News Corp., the global media conglomerate controlled by Rupert Murdoch.
Feder was named acting CEO, and Take-Two said the new directors plan to work closely with Eibeler to ensure an orderly executive transition.
In a statement confirming the shareholder vote, Zelnick praised the company's "exceptional brands and creative resources" and vowed that the game maker's new leadership would focus on maximizing its value to shareholders, gamers and employees.
"The new board plans to put in place strategies designed to revitalize Take-Two, focus on supporting and enhancing its creative output, improve its margins and ensure that the 2007 release pipeline meets expectations," Zelnick said.
Financial analysts have criticized Take-Two for relying too heavily on relatively uncreative sequels, sports games and bloodthirsty "first-person shooters." While so-called hardcore games remain popular with teens and young men, new online genres - trivia quizzes, word games and multiplayer role-playing games - are catching on with women, older players and millions of mobile phone users.
Child advocacy groups and legislators are Take-Two's biggest foes, complaining that the company produces the industry's most violent, mean-spirited games.
In "Grand Theft Auto," players shoot pedestrians and police with reckless abandon. Another hit is "Bully," about a slingshot-wielding 15-year-old at Bullworth Academy boarding school, whose motto is "Canis Canem Edit," Latin for "dog eat dog."
Like a video game character with unlimited health, board member John Levy survived Thursday's purge. Backed by shareholders, Levy is CEO of Board Advisory Services, a consulting firm that advises public companies in the areas of corporate governance, corporate compliance, financial reporting and financial strategies.
Investors voted to oust director Grover C. Brown, but the new directors, meeting after the shareholders' vote, decided to give the former Delaware judge another chance and elected him as an additional director.
In addition to Zelnick and Feder, the others newcomers who won seats on the board were: Michael Dornemann, an entertainment and marketing executive; Jon Moses, the CEO of UGO Networks, a company that oversees a network of online game sites; and Michael James Sheresky, a senior vice president at the William Morris Agency.
Years of Drama
The coup caps several years of drama at New York-based Take-Two, one of the world's biggest video game publishers and a rival to Activision, THQ and top-selling Electronic Arts.
Take-Two's former chairman and CEO, Ryan A. Brant, became the first chief executive to be convicted of backdating stock options. In February, he pleaded guilty in a New York state court to first-degree falsification of business records in a deal that lets him avoid prison.
The company restated past results to account for stock options grants that have been incorrectly booked and expensed, and it recorded $42.1 million in additional expenses between 1997 and April 2005.
Video game industry analyst Tom Gardner, CEO of Alexandria, Va.-based investment company The Motley Fool, praised the revolt.
"Sometimes institutions play football with small public companies, and they can inflict a lot of damage if companies don't have a large enough ownership stake to protect against institutions that squeeze out profits in the near term," Gardner said. "But in this case, the institutions look quite good: You have backdated options, hidden porn, accounting issues and mismanagement. You have management that was at best incompetent and at worst dishonest."