THQ 2007 Annual Report Download - page 27

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19
Financial Statements of our Amendment No. 2 on Form 10-K/A for theyear ended March 31, 2006, which
in a number of occasions resulted in employees receiving options with stated exerciseprices lower than the
market prices as measured basedupon the measurement dates as determined by the applicable accounting
standards. The Special Committee also recommended certainremedial measures with respect to the
Company’s stock option granting practices, which were adopted by the Board. TheSpecial Committee and
the Investigative Team reported the Special Committee’s findings to theSECon January 8, 2007.
Lawsuits related to our historical stockoption granting practices
Kukor and Ramsey v. Haller, et. Al.On August 25, 2006, following our announcement of the informal
inquiry by theSEC, apurported shareholderderivative action captionedRamsey v. Haller et Al.was filed
against certain of our current and former officers and directors in the California Superior Court, Los
Angeles County. Thecomplaint alleges, amongother things, purported improprieties in our issuance of
stock options,breach of fiduciary duty and unjust enrichment. Another lawsuit wassubsequentlyfiledby
the same law firm on behalf of another purported shareholder, DavidKukor, and the parties stipulated to
consolidate the two actions. On or about April 19, 2007, aConsolidated Shareholder Derivative Complaint
(the “Consolidated Complaint”) was filed, alleging the same types of claimsand quoting from various
public statements by THQ since thefilingof theoriginal complaint. THQ is also named as a nominal
defendant. The Company intends to demur to theConsolidated Complaint. Pursuant to court order,the
demurrer must be filed by May 28, 2007, andahearingforthe demurrer is currentlyscheduled for
August 9, 2007. Discovery in this matter is currently stayed.
Hawaii Laborers Pension Fund v. THQ, et. Al. In October2006, a purported shareholderderivative action
captioned Hawaii Laborers Pension Fund v. THQ, et. Al.,wasfiled against certain of our current and former
officers and directors in federal district court, alleging claims under Section 14(a) of the Securities
ExchangeAct of 1934aswell as various state law claims arising out of alleged breaches of fiduciary duty
related to stock option practices. On or about April 20, 2007, theplaintiff filed an Amended and Verified
Shareholder Derivative Complaint (the “Amended Complaint”) alleging that certain current andformer
officers and directors engaged in a conspiracy to manipulate grants dates associated with stock options and
then concealed thealleged backdatingoption scheme and filed false and misleading statements with the
SEC. THQ is also named as a nominal defendant. The Company intends to file aMotion to Dismiss the
Amended Complaint, which pursuant to astipulation between theparties, must be filed by June 1, 2007.
No discoveryhas yet commencedin this action.
Although litigation is subject to inherent uncertainties, we do not believethe results of theseactions will,
individually or in theaggregate, have amaterial adverse impact on our consolidated financial position or
results of operations.
Other
We arealso involved in additional routinelitigation arising in theordinary courseof our business. In the
opinionof our management, none of such pendinglitigation is expected to have a materialadverse effect
on our consolidated financialcondition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
Therewere no matterssubmitted to a vote of securityholders during thefourth quarter of thefiscal year
coveredby this AnnualReport.