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THQ confirms 240 job cuts, CEO takes pay cut
THQ confirms 240 job cuts, CEO takes pay cut
February 1, 2012 | By Kris Graft

Ailing publisher THQ on Wednesday confirmed deep cuts to its headcount, related to recent restructuring measures.

The publisher initiated a plan last week to lay off 240 sales, general and administrative personnel worldwide, according to a regulatory filing.

The confirmation of the cuts comes shortly after THQ said it would be exiting the once-lucrative kid's licensed game business, and restructuring to focus on core games and digital revenues.

Most of the layoffs will be completed by the end of March, the company said, with the rest completed by September. Severance payments to laid-off workers will amount to around $8 million.

Company president and CEO Brian Farrell will be taking a 50 percent cut to his base salary, from $718,500 to $359,250, for a one-year period beginning February 13, 2012.

After that year is up, THQ and Farrell will then review the base salary going forward, "provided that it shall be no lower than $718,500 per year commencing on February 13, 2013." That amount is subject to increase, but not decrease, for years going forward, the contract said. The revised contract also reduces Farrell's bonuses. Non-employee directors also took 50 percent cuts.

THQ currently faces a possible delisting from the Nasdaq stock exchange. The company has until July 23 to maintain a share price of at least $1 per share for 10 consecutive days. Its stock is currently listed at around 70 cents per share.

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Samuel Batista
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I'm find it very sad that CEOs salaries only get cut when there are massive layoffs at big companies. If we had the tradition to cut their salaries every time they make a bad decision from the shareholders perspective (japan does this to some extent), then they would've gone through more CEOs and I'm sure that someone with good grasp on the pulse of the market would've stepped up and taken the company in a better direction much earlier.

Ysable Wolf
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Hey Dude,

Not kosher to steal some else's profile pic and use it as your own. I have had the binary monk since 2005. Use something else please.


matthew diprinzio
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Why is it that if a CEO does a poor job he gets a pay cut, but if an employee messes up they lose their job? You would think the person whose decisions have huge ramifications on the company would be dealt with more severely.

Justin Kwok
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Even worse... why is it that if the employee does nothing wrong, they lose their job while the CEO gets a "pay cut" and still makes 8 times as much as the guy who lost his job?

Not just that... in the last YEAR (it's even sadder if you look further back than that), THQ stock has gone from ~$6-7 down to ~$0.60 - $0.70. How does this guy still have a job?

He shouldn't have been given a pay cut, he should have been given his pink slip. And cut the ropes on his golden parachute.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Joe McGinn
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Well at least now CEO makes "only" three-quarters of a million instead of two million as his reward if he gets fired. From their SEC filing:

"The Amendment (i) reduces Mr. Farrell's base salary by 50%, from $718,500 to $359,250, for a one-year period beginning February 13, 2012, and (ii) changes the compensation that Mr. Farrell would receive if he were terminated without “Cause” or resigned for “Good Reason” (both, as terms are defined in the Employment Agreement) by reducing the lump sum payment component that is tied to bonus compensation from three (3) times the annual rate of the highest bonus amounts Mr. Farrell received during any prior fiscal year to one (1) times such bonus amount. The Amendment also amends certain other provisions in the Employment Agreement to clarify that severance payments upon a change-of-control are not affected by the reduced base salary that Mr. Farrell will receive."

thay thay
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Farrell should have been ousted as CEO. He has done a terrible job. He has been painting too rosy of a picture at THQ for years while THQ continued to release mostly mediocre games. The company still has potential..hopefully they survive.

Boyd Lake
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Most Execs get paid in options and stock anyhow

William Barnes
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Don't forget bonuses. Shoot, I'd half my pay for a year if my bonus were doubled too. (the bonuses are bigger than the salary in these exec positions.)

Ken Nakai
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CEOs for public companies make a lot more. That's why they referred to it as his "base salary" not just "salary". And he makes a lot less than many other CEOs do (but then we're talking base salary here so I could be wrong here). Of course, as has been mentioned, you don't usually still have a job if you screwed the company so bad that its stock is worthless. Granted, not everything is under his control but on the flip side he ultimately has to run the company well enough for the shareholders to see an increase in value in the stocks they own.

My guess is he's got a serious golden parachute that's more expensive than just keeping him on board with a $300k salary. Probably cost the company millions if they just fire him.

In the end, the problem is the friggin board of directors. They're the ones that hired him and gave him the contract that cost them ridiculous amounts of money in the first place. If anything, THEY should be fired/replaced and the new board should fire him. :)

thay thay
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CEO and BOD are one big buddy system as the BOD members are CEOs of other companies. They protect each other.

Joe kennedy
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I'd like to know why is Danny Bilson not even mentioned in any of these failures. Yes Brian should've gotten a pink slip for sure but so should have Danny Bilson and the rest of his henchmen.

Brian's biggest mistake was to let Danny run these developers into the ground as well.

THQ is done! I sure hope these guys don't infect the rest of the industry for years to come!!!!

Unfortunately your only as good as your last title and THQ left themselves out of contention for quite some time in the AAA ladder.

That being said,..there are still good developers in there and I hope they find success elsewhere.

I wish them luck!!!!

Rumors or not, I'm starting to believe the cancellations of 2014 titles; which seems more like 2013 the way this thing is diving.

Pallav Nawani
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Maybe it is time to get a new CEO?

Shannon Quesnel
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Apologies if I violate forum/posting rules.

"Ysable Wolf - Not kosher to steal some else's profile pic and use it as your own. I have had the binary monk since 2005. Use something else please."

Why is it that some profile avatars are blank?

BACK ON TOPIC: I hope someone smart snaps up Relic away from this disaster (240 jobs lost qualifies as a disaster for a games publisher).

Mikhail Mukin
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It is hard to tell w/o knowing the details - and I was not following THQ that closely... I have seen good projects being messed up while experienced person was directing it, sometimes it is just "a series of unfortunate events".

You can not pay CEO of a big company $150K... this is a different "grade"... like you can not pay senior game engineer $50K...

What I was curious is what the people on a publisher's side are doing and why there sometimes seem to be so many of them. I was told once that for our game project there is like a team of 30 people working on a publisher side. I could not figure out what they were doing... I think most of QA was outsourced... we had some QA people at publisher side but to be honest, I would not call them TCR/TRC and platform policy experts. Pictures, movies - I think almost all of that was prepared by our art people (I guess they just "approved" it)...

We had no technical direction or technical help and while I can not say for certain, I rarely seen detailed, daily/weekly feedback on missions and game play. Some directions, acceptance lists etc after each milestone... but this is something ~2 people can do (while working on multiple games).

As to finances - I think payroll was outsourced and company finances - don't know... I somehow remember only our finance director for a fairly big developer (but I suspect there were more - probably contractors?).

So what were those people doing? What their skills are? How do they contribute to making money? Why, when it was so obvious project is going in the wrong direction, not gonna make it etc - most of the time there was no real help from the publisher? I think I remember one case (Microsoft) when they send a great guy to us who made our game a lot more fun in like 2 weeks (to be honest - making changes some of us on the project wanted anyway) - it was too late though, project canceled and almost 2 years wasted. What they were doing for almost 2 years, why not "correct" us when the game was boring?

Very long time ago in Russia (before moving to games) I worked at computational center of insurance company. There were people working and there were some people among the "top bosses" that... did not seem to be doing anything. They were well dressed, polite, but not experts in anything. I slowly learned that the goal of having them was that they were "connected". They were connected with whatever mafia was running this and some other companies, with people in government etc. They could bring us big clients with money. This is it. They did not really have to "do any work". This is how things run in Russia: a government minister would have his son/wife among the top people of some bank/insurance, it means companies under the minister have ("unofficially") to use this bank/insurance. Then this son/wife arranges for his relatives/friends to be VPs, department leads etc. People under them would do actual work anyway.

When I moved to US, it was explained to me how our company was running (it was half a joke though): "we hire people who can bring us contracts. we might do or fail contracts (looked like this part was less important?)... then we hire new people who can bring us new connections/contracts... but now we are in real trouble - we don't have money to hire new wave of people who can bring new contracts". The company is no more.

So I understand how a bank or insurance or "big clients" contractor company can run and why you have lots of people (occasionally in the office) who "do not seem to be really needed" at first glance. But gaming companies... they sell to millions of customers, right? You can not "force" or "bribe" so many people to buy specific products? At some point I was told that one of the purpose of those people on the publisher side is to arrange for "shelf space" with major retailers and for interviews/magazine publications with media. This is where lots of people with "contacts" come and why they are needed. I guess this makes sense but with things going more and more digital and getting info from only "semi official" forums, facebook etc - I would think the whole "shelf space arranging people" are not needed in such numbers? No?

ivan velho
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Man, all that you say is in respect to one question: " Why companies exists ?" . They exists because is a way to robber your work. Major people in ALL companies in world ( I mean ALL) do almost nothing useful . They told you that they manage, they do QA, consulting, etc, but they are lying to you. These concept was created in the time where all technology was in the hands of who were created it , the technicians. Other people, most of them , merchants realize that some activities could be very profitable. But they don't had the knowledge to make those activities . So they created "management", a way to describe a process in simple steps , with inspection methods, in a way that an idiot coud do it. Of course, these produces relatively simple products but the scale could turn this highly profitable. All idea behind the companies is not to work, to do something , people that know how, that have good ideas, that creates interesting things are very rare. All the idea is stay close of them and robber what you can. The idea of a high production level assembly line has a problem,a limitation: rate of change.

Mikhail Mukin
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@ivan: companies exist to make money for those who own the companies. I understand that in some types of busyness corruption is a norm (government related, big contracts). A relative of mine working as a salesman for a big well known software company with mostly "big contracts" had a client on a paid Las Vegas trip last year - this is normal... But gaming busyness is about selling to millions of customers, not to a few you can bribe. So I would assume people who own this and thinking long term would have a reason to not have lots of "extra people", not to hire CEOs who just gets loads of $ and destroys the company in the process etc. But maybe, as somebody mentioned, they also worry about shorter term and how they can make money and move to "another venture"... once a CEO always a CEO... same with BOD... I mostly worked at developer companies so far, and I would say 80% of people were "normally" working... theirs is a different world...

ivan velho
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Man, once the company is in professional management , is over. Management says that you can manage every business with the right inspection and control methods. Game companies has shares in Wall Street and high profits . Same management methodology of other companies is real . You have a point: games must be good . But, according to whom ? You always have Barbie games, bejeweled clones, tetris clones, etc (Popcap?) . They sells millions , because major of customers are not gamers.Ok, I play these games too but you have the same scenario again, relatively simple products could be profitable and a simple assembly line could be created. I read in the article THQ had problems with kid's line, and these line was profitable some time. I believe that studios has hard working people, in most cases. And I agree with you with an 80% number in studios because they need. They are the technicians, not the marchants.

Mikhail Mukin
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If management can build "simple assembly line" that generates simple games that sell millions - excellent! Give CEO a huge bonus. I'm totally fine with it! (yeah, I spent a bit of time in busyness school after my technical education... I'm not against "managers" - they are needed in any industry!).

What I'm not fine with is top management not doing anything "extraordinary", having big teams on publisher side with unknown "work produced", not helping devs when they need help, not realizing what is going on with projects till it is too late, making changes slow and inefficiently and so on. If your assembly line gonna break in a year - this is CEO's/senior VPs job to see it and adjust in time...