THQ 2008 Annual Report Download - page 94

the estimated fair value at the grant dates in accordance with the provisions of FAS 123 (in thousands,
except per share amounts):
Fiscal year ended
March 31, 2006
Net income—as reported ................................ $32,106
Add: Stock-based employee compensation expense included in
reported net income, net of related tax benefit ............. 2,396
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards, net of
related tax benefit .................................. (13,131)
Net income—pro forma ................................. $21,371
Earnings per share:
Basic—as reported ................................. $ 0.51
Basic—pro forma .................................. $ 0.34
Diluted—as reported ................................ $ 0.49
Diluted—pro forma ................................ $ 0.33
15. Stockholders Rights Plan
THQ’s stockholders hold their stock subject to an Amended and Restated Rights Agreement dated
August 22, 2001, as amended by the First Amendment to the Amended and Restated Rights Agreement,
dated as of April 9, 2002 (collectively, the ‘‘Rights Agreement’’). Pursuant to the Rights Agreement, and as
adjusted pursuant to Section 11(p) of the Rights Agreement as a result of the stock splits which occurred
on April 9, 2002 and on September 1, 2005, each share of THQ common stock is accompanied by
four-ninths (4/9) of a preferred stock purchase right (‘‘Right’’) which entitles the registered holder to
purchase four nine-thousandths (4/9000) of a share of Series A Junior Participating Preferred Stock at an
exercise price of $44.44. The Rights become exercisable 10 days after any person or group acquires, or 10
business days after any person or group has announced its intention to commence a tender offer for, 15%
or more of the outstanding common stock of THQ. In the event that any person or group acquires 15% or
more of our outstanding common stock, each holder of a Right (other than such person or group) will be
entitled to purchase, at the exercise price, the number of shares of common stock having a current market
value equal to two times the exercise price of the Right. If we are acquired in a merger or other business
combination, each registered holder of a Right will be entitled to purchase, at the exercise price, a number
of shares of common stock of the acquirer having a current market value equal to two times the exercise
price of the Right.
The Board may redeem the Rights at a redemption price of $0.001 per Right, subject to adjustment, at any
time until 10 days after the acquisition of 15% or more of the common stock of THQ. At any time after a
person or group has acquired 15% or more but less than 50% of the common stock, the Board may
exchange all or part of the Rights for shares of common stock at an exchange ratio of 4/9 shares of
common stock for each Right or four nine-thousandths (4/9000) of a share of Series A Junior Participating
Preferred Stock (‘‘Preferred Stock’’) per Right. The Rights expire on June 21, 2010.
Pursuant to the Certificate of Designation, as amended (the ‘‘Certificate of Designation’’), establishing the
Preferred Stock, effective as September 1, 2005: (i) each share of Preferred Stock is entitled to quarterly
dividends equal to 2,250 times the aggregate per share amount of all dividends declared on the common
stock, (ii) each share of Preferred Stock will be entitled to 2,250 votes on all matters submitted to a vote of
THQ’s stockholders, (iii) the ‘‘adjustment number’’ (as defined in the Certificate of Designation) used in
Section 6 of the Certificate of Designation for calculating the liquidation amount for Preferred Stock is
2,250 and (iv) in the event of a consolidation, merger, combination or similar transaction, each share of
Preferred Stock will be exchanged or changed into an amount per share equal to 2,250 times the amount of
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