THQ Chief Executive to Take 11% Pay Cut

THQ Inc., a Calabasas video-game developer that recently reported flat earnings for 1992, said its chief executive is taking an 11% pay cut and relinquishing his right to get 2.2 million THQ common shares worth about $7.8 million.

Jack Friedman, who is also THQ’s president, cut back his annual base salary by $100,000, to $850,000, and agreed to cut his annual bonus by about $100,000 a year. Based on those terms, THQ said it has agreed to extend Friedman’s contract through 1997.

Friedman founded the company in 1990, and its sales have grown quickly on the success of video games tied to well-known books and movies, such as “Home Alone.” But THQ’s profit last year, at $4.1 million, was little changed from 1991, even though its sales soared 72%, to $56.5 million.

THQ had kept 5 million shares in escrow--including Friedman’s 2.2 million--to be distributed to certain existing shareholders if THQ recorded cumulative pretax earnings of $28.5 million during the three years ending Dec. 31.

But holders of the stock in escrow “relinquished” rights to the shares to remove the shares’ dilutive effect on THQ’s overall common-stock base and “in light of the decreased likelihood” that the profit goal would be reached, THQ said.

However, Friedman was granted options to acquire up to 1 million additional THQ shares at the stock’s closing bid price March 10, which was $3.55 a share.