Some shareholders in Playtech have hit out at a proposal to reward senior executives, including chief Mor Weizer, with substantial bonuses after the gambling technology company sealed a €2.3bn deal to dispose of 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 senior team, including its executive directors, were to receive cash bonuses from a pool of up to €100mn from proceeds of the deal. The company said Weizer would be “the largest participant” beneficiary without specifying how much he could receive.
The proposal also states that Playtech management will be guaranteed as much as 10 per cent of the gain in any future disposals.
A separate bonus pool of €34mn will be paid out to Snaitech’s management, of which chief executive Fabio Schiavolin is in line to receive the most.
However, some shareholders have criticised the pay proposal, questioning why such an amount would be granted without a performance target and raising concerns over corporate governance.
Jeremy Raper, a Playtech investor who manages his own family office, published an open letter to the chair of the remuneration committee this week calling the proposed pay packages “the most egregious case of shareholder value expropriation in the history of UK public markets”.
He blamed the company for not having a performance target or benchmarking the €134mn bonus pool against peer companies, claiming it would make Weizer earn more than 10 times the median FTSE 30 CEO salary in 2022. Management would also be incentivised to “pull the trigger on any future deal, no matter how destructive to the company, and collect their 10 per cent take”, he said.
In an open letter sent to Playtech chair Brian Mattingley the day after the announcement, Peter Smith, managing partner of London-based Palm Harbour Capital, said “this payment appears to have come simply because there is a large cash inflow and for no other reason”.
“There is already in place a strong remuneration package with part of it linked to shareholder returns. There is absolutely no need for this additional payment,” he added.
Weizer’s overall remuneration was €2.9mn last year. The company’s annual report showed Playtech has been lagging behind the FTSE 250 in total shareholder returns since 2018. The company’s share price has, however, risen almost 80 per cent over the past 12 months.
“If Mor Weizer is going to get paid anything close to what they’re talking about, he needs to meet some crazy targets,” said a senior executive at an investment fund. An executive of another investment fund said: “The amount is outrageous . . . they are destroying value to shareholders.”
Shares in Playtech, which provides software to many of the world’s leading gambling businesses, dropped more than 5 per cent on the day of the Snaitech deal announcement — even though Flutter’s offer represented a 16.5 per cent premium of Playtech’s previous share price and was almost three times higher than the €846mn Playtech acquired the business for in 2018. It will also return €1.7bn-€1.8bn to shareholders as a special dividend.
“We are pleased to see Playtech delivering for its shareholders, crystallising 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 a vote but has indicated it will take place by the end of November.
The company said when announcing the pay scheme that shareholders holding a collective stake of 34.4 per cent had “irrevocably undertaken to vote” in favour of it.
It said in a further statement: “Playtech actively and continuously engages with its shareholders in private, and strongly believes that is the most constructive way to engage.”
Weizer described the proposal as an “incentive plan” on an earnings call on Monday, saying its purpose is to “align the management with shareholders . . . this creates incentive to grow the business and create value for the benefit of our shareholders”.
