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id Turns Down Activision, Gets Sued
Gamespot is reporting on an article from the WSJ, stating that id software turned down a takeover bid by Activision earlier this year. Former employee Adrian Carmack, who was let go around that time, now states that his termination from the company was the result of a subtle ousting by the other owners. From the article: "... it is Carmack's contention that the other id owners deliberately rejected all of Activision's offers so they could then fire him, thereby acquiring his shares for a fraction of what the publisher would have paid for them. He claims that his fellow co-owners, which control a combined 59 percent of id, began a death-of-a-1,000-cuts-style approach to force him out--closely monitoring his hours, stripping him of privileges, and denying him access to board-related documents. The other board members also ceased redistributing profits as dividends in 2004 (for the five years prior to that, Carmack had received approximately $3.5 million per year)." Coverage also available from Gamasutra.
No matter how much you may make, being stabbed in the back still hurts.
Sometimes boldness is in fashion. Sometimes only the brave will be bold.
The Doom3 art direction could not have anything to do with this could it?
This sums it up (scroll down).
Wow, sent an e-mail as suggested when clicking on "use classic" banner, and got a fast response that addressed my msg
The real question is whether the contract in question is valid or not, and if it is, is it applicable to this particular series of events. It's likely that AC will contend that he was fired without cause and that the contract was only meant to require him to sell if he did not perform. Id will probably counter by trying to show that he did not perform his job acceptably.
Right now there is no way to tell who is right. The guy could be compleately incompetent. He could have been fired for abusing employees. He could have been fired because he back-stabbed the other owners durring negotiations. It could be that the other owners are greedy bastards. There are plenty of reasonable explainations for both sides. That's why a court is going to have to work it out. If it was clear-cut, it would be settled out of court.
The policy of the United States is worse than bad---it is insane. -- Ludwig von Mises, Economic Policy(1959)
I can see your point, but to me it sounds a little like a 35 year old football player complaining he doesn't get ten million dollar contracts any more.
Just because you earn more money doesn't mean you don't have to budget.
Code is Speech. No to Censorship.
Like most people who maximize spending to the capacity of their income (or speculative future ability to pay interest), it was his choice to do so. There was no dire necessity for housing, food, clothing, etc which would require him to spend in excess. If he's in dire need of continuation of these funds then he should seriously think about liquidating his assets and clearing his debts, unless, of course, he thinks he can make another 3.5 million a year somewhere else.
Imagine the wealth he would have if he'd spent/saved his money wisely? Or the piece of mind he could have if he let go of the trappings of social pressure to consume? Hell, he could've funded his artistic passion for the rest of his life if he'd been frugal with his money. I suppose, though, if it wasn't his real passion, and greed alone drives his lust for income, then id is better off without him.
Given the history of the situation this situation reads like a self-spoiled over-spender having their gravy train ripped from them after sorrowly disappointing their business partners. He gambled that he could hold out for more, and got bit in the ass as a result. Now he's trying to back out of a contract he agreed to and negotiated himself.
Stabbed in the back? Hardly. He's a greedy disappointment.
contracts are only as good as your lawyer can argue against them.
People who earn millions per year and spend as if they will continue to make millions each year forever are fools and deserve the fate they get when that high income level stops.
The majority of people earning $1 million or more per year do not sustain incomes at that level for more than 3-4 years. Eventually their sports career tanks, they're no longer on top of the music charts, or the company's board ousts them from their CxO position. When you make that kind of money, you need to save as if each year is the last year you'll make that much, or eventually you'll end up just like those broke actors and athletes who were once millionaires.
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There is inferior bacteria on the interior of your posterior.
People who make $40k a year telling people who make $3500k a year how they should act, what they should buy, and how they should live is NO different than a rich guy telling a working guy what to do. It's no one else's business.
You must have no idea of the kinds of personal expenses it takes in order to make 3.5m a year. Even $250k a year, you have to "spend money to make money", including being presentable to those who might trust you with millions of dollars worth of business.
Another thing is taxes. You DO buy the expensive home(s) as a corporate asset to get depreciation, to offset taxes, because at that level, you are paying 38% of your income in taxes, but your capital gains when you sell is 20%. (think 1.25 million in income tax, plus state income tax if you don't) Tax deductions for interest on your home starts to disappear once you get over ~150k, so yes, you do find ways to move your money around and convert income into capital gains.
Anyone who says that if they made 3.5 million, they would live like they made 50k or 100k is either full of crap, or the concept of 3.5 million a year is simply beyond their comprehension. You would get a CPA, he would tell you to do all the deductions you could, which means expenses or it is paid as tax. Its pretty easy to show on paper how it saves you hundred(s) of thousands in tax per year, legally.
So yes, it can bankrupt someone even if their lifestyle is not so extreme.
Tequila: It's not just for breakfast anymore!
If Activision offers $200M for your company, and you reject it because you consider it too low of an offer, then buying out Adrian for $11M is clearly underpaying him for his shares if he has anything more than 5% of the shares. If he's been receiving $3M+ in dividends, chances are he owns more than 5%. Note: Just because the rest of the owners have 59% doesn't mean that Adrian has the remaining 41%. Many of the remaining shares can be owned by the company in order to give away as employee stock options, sell to investors, or various other situations.
think 1.25 million in income tax, plus state income tax if you don't
So he's left with a measly $2M per year after taxes. If he put just one years worth of net into an average mutual fund he could easily be looking at $200+k per year in dividends. That's over twice what my family lives on, and we're doing just fine.
And I very much doubt the CPA told him to just piss his money away. It might not be liquid, but it's still there, invested in something that could be liquidated if he needed it.
Sorry, but he's only going to be bankrupted if he's a complete fucking idiot, and that certainly won't get him any sympathy from me.
Under capitalism man exploits man. Under communism it's the other way around.
The reason they do not trust him might be that he prefered to cash out the company instead of remaining independant.
id's success and identity is based on being independant.
They are financially independant, they are neutral on the graphic cards issue giving good and bad points whenever it's due, they are vocal on the patent issue whenever it prevents them from working, even their code is portable and proprietary vendor independant. And they do the game they want, good or bad.
So i understand perfectly that there is a problem when you have such a strong commitment to independance and a 41% shareholder don't care anymore and want to get the money instead.
Also, he had every rights to try to sell the company, as you said, and they had every rights, being 59% of the remaining shares, to refuse.
And then, they offered him 20 millions which he turned down, so he will have some hard times proving they are doing him some wrong when they give him 11M as the contract obliges them to.
Directly, no. Indirectly yes. In order to attain the wealth needed to support a high standard of living you have to provide a product to the consumers that improves their lives in their own estimation by more than the other alternatives. That is to say, when someone becomes wealthy in a competative market (as opposed to a back room government deal) it is because they earned it and deserved it in the minds of the consumers who purchased from them. So it could be said that a high standard of living is an intrinsic justification so long as it is maintained competatively.
The policy of the United States is worse than bad---it is insane. -- Ludwig von Mises, Economic Policy(1959)
I guess it depends on how much that guy brought to the table on day 1. More money or more sweat, he may have deserved that 41%.