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Some Playtech shareholders have criticized a proposal to reward top executives, including director Mor Weizer, with substantial bonuses after the gambling technology company sealed a €2.3 billion deal to offload its Italian business.
Playtech announced the sale of its Italian sports betting and gaming business Snaitech to Paddy Power owner Flutter last month. On the same day, the FTSE 250 company said its management team, including its chief executives, will receive cash bonuses from a pool of up to €100 million from the proceeds of the deal. The company said Weizer would be the “largest participant” beneficiary without specifying how much he could receive.
The proposal also establishes that playtech Management will be guaranteed up to 10 per cent of the profits on any future disposal.
A separate bonus of €34 million will be paid to Snaitech management, of which CEO Fabio Schiavolin will receive the lion’s share.
However, some shareholders have criticized the pay proposal, questioning why such an amount would be awarded without a performance target and raising concerns about corporate governance.
Jeremy Raper, a Playtech investor who runs his own family office, published an open letter to the president of the remuneration The committee this week called the proposed pay packages “the most egregious case of expropriation of shareholder value in the history of the UK public markets”.
He blamed the company for not having a performance target or comparing the €134 million bonus pool with similar companies, claiming it would see Weizer earn more than 10 times the average salary of a FTSE 30 chief executive in 2022. Management would also be incentivized to “pull the trigger.” on any future agreement, no matter how destructive it may be for the company, and collect his 10%,” he said.
In an open letter sent to Playtech chairman Brian Mattingley the day after the announcement, Peter Smith, managing partner at London-based Palm Harbor Capital, said: “This payment appears to have occurred simply because there is a large influx of cash and not for any other reason.” ”.
“There is already a strong remuneration package, part of which is linked to shareholder returns. “There is absolutely no need for this additional payment,” he added.
Weizer’s total remuneration was €2.9 million last year. The company’s annual report showed that Playtech has lagged the FTSE 250 in total shareholder returns since 2018. However, the company’s share price has risen almost 80 per cent in the last 12 months.
“If Mor Weizer wants to get paid anything like what they’re talking about, he needs to hit some crazy targets,” said a senior hedge fund executive. An executive at another investment fund said: “The amount is scandalous. . . “They are destroying value for shareholders.”
Shares of Playtech, which provides software to many of the world’s top gaming companies, fell more than 5 percent on the day the Snaitech deal was announced, even though Flutter’s offer represented a 16,000 premium. 5 percent of Playtech’s previous share price and was almost three times higher than the €846 million for which Playtech acquired the business in 2018. It will also return between €1.7 billion and €1.8 billion to shareholders as a special dividend.
“We are pleased to see Playtech deliver for its shareholders, crystallizing the value of one of its key assets at a price well above market expectations,” said Thomas Moore, Senior Investment Director at Abrdn.
Playtech has not set a date for the vote, but has indicated that it will take place at the end of November.
The company said in announcing the pay plan that shareholders holding a collective 34.4 percent stake had “irrevocably committed to voting” in favor of it.
He said in a further statement: “Playtech actively and continually engages with its shareholders privately and firmly believes this is the most constructive way to engage.”
Weizer described the proposal as an “incentive plan” on an earnings conference call Monday, saying its purpose is to “align management with shareholders.” . . This creates an incentive to grow the business and create value for the benefit of our shareholders.”