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Troubled Swedish games firm Starbreeze to let go 25 per cent of workforce this year, but chair and board given pay rises

Troubled Swedish games firm Starbreeze to let go 25 per cent of workforce this year, but chair and board given pay rises

Swedish games developer and publisher Starbreeze has said it is making a quarter of its 240-strong workforce redundant in an effort to reduce costs.

The firm announced the change via its investor relations page, saying that around 60 members of staff were going to be let go by November of this year. This action will reduce overheads by SEK 3m ($318,615) each month, or SEK 36m ($3.8m) each year.

”In the past six months, we have made a number of changes to the business following our strategy to focus on the core business. We have divested some operations that we consider non-core and we now have to look inward to make the core business more efficient," CEO Mikael Nermark said.

"To make staff reductions is a tough decision to make, but necessary to enable Starbreeze to develop well long-term."

For the last financial quarter - the three months ending March 31st - Starbreeze made a loss of $17.4m before tax, saying that it wouldn't be able to continue operating if it wasn't able to secure funding.

The firm also announced it will sell its Indian Dhruva Interactive studio, alongside its 91.82 per cent share in the firm, to Rockstar Games for $7.9m. This deal is set to close during the first half of parent firm Take-Two's financial year - so by the end of September 2019.

Starbreeze has also sold back the publishing right to 10 Crowns to developer Mohawk, expecting to make back what it has spent on the project so far. No figure was ever placed on that deal, so it's hard to see how much cash the Swedish firm will be bringing back.

in February 2019, Starbreeze applied for a three-month extension to its reconstruction period after entering administration in December 2018. This was granted, but now the firm has asked for a second extension, which would take it until September 3rd, 2019. This is yet to be granted.

All of this financial hardship hasn't stopped Starbreeze's chair and board of directors being giving a pay rise, however. 

At the shareholder annual general meeting (AGM) on June 4th, Torgny Hellström was elected chair of the board, being compensated SEK 950,000 ($100,852) for his services. That's a 35.7 per cent increase on his predecessor, Michael Hjorth, who was given SEK 700,000 ($74,312) in May 2018 when he was re-elected to the role.

Meanwhile, the board of directors has been reduced from six to five. Non-executive members of the board are being paid SEK 280,000 ($29,724) each - save for the newly-appointed Stefano Salbe who has declined compensation. That's a total of SEK 1.12m ($118,899) paid to the board.

Its predecessor - elected in May 2018 - was one person larger, but each member was paid SEK 210,000 ($22,293), making a total of SEK 1.26m ($133,761).

In total, the amount paid to both the chair and the board of directors for 2019 clocks in at SEK 2.07m ($219,751), a 5.6 per cent increase on the school of 2018's SEK 1.96m ($208,073) compensation.

Asked for comment by PCGamesInsider.biz, Starbreeze said that the Nomination Committee - whose role is to evaluate the board and suggest new members - saw that the role of the chair and directors was going to be more strenuous than before. 

“Due to the challenging situation the company is in, the Nomination Committee assesses that the board work will be significantly more time consuming outside of the norm, in particular for the Chair and the Audit Committee Chair," it said, as translated into English by Starbreeze's comms team.

"The proposal should be considered with this in mind.”


Editor - PC Games Insider

Alex Calvin launched PCGamesInsider.biz in August 2017 and has been its editor since. Prior to this, he was deputy editor at UK based games trade paper MCV and content editor for marketing and events for London Games Festival 2017. His work has also appeared in Eurogamer, The Observer, Kotaku UK, Esquire UK and Develop.

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