Investors resist ‘obscene payday’ at Playtech

A row has broken out at Playtech after shareholders criticised an “obscene” and “egregious” plan by the gambling technology group to hand £112 million in cash bonuses to bosses following the sale of its Italian operations.
The FTSE 250 company revealed last month that it would use the proceeds of the pending €2.3 billion sale of its Snaitech business to Flutter Entertainment to return between €1.7 billion and €1.8 billion to its shareholders and pay bonuses of up to €100 million in total to its senior team, including Mor Weizer, its chief executive.
A further bonus pool amounting to €34 million will be paid out to the managers of Snaitech, taking the total to €134 million (£112 million).
In addition, Playtech wants to overhaul future bonus payouts for its bosses through a new “transformation plan” that will entitle managers to one-off awards equal to up to 10 per cent of the value of any future shareholder distributions following any further deals, including a sale of Playtech.
It said its plans have the backing of its biggest shareholders, who are based in Asia and speak for 34.4 per cent of Playtech stock.
Some investors have hit out at the rewards, which require shareholder approval of at least 50 per cent at a binding vote.
In an open letter to Playtech, which was first reported by the Financial Times, Jeremy Raper, an Australian activist investor, warned that the plans “exemplify crony capitalism” and would “constitute the most egregious case of shareholder value expropriation in the history of UK public markets”.
He claimed the bonus proposals were “a set of schemes that runs roughshod over huge tracts” of the City’s corporate governance code because the development of the plans lacked transparency and the schemes were ad hoc, retrospective and not linked to particular targets.
“Management is thus incentivised under the new plans to pull the trigger on any future deal, no matter how destructive to the company, and collect their 10 per cent take, rather than persist in the better course of simply growing the business independently for all shareholders,” he argued.
In a similar letter, Peter Smith, of the London-based Palm Harbour Capital, also raised concerns about the proposed bonuses, which he called “an obscene payday”.
• Alistair Osborne: City’s old rules were there for a reason
“This payment appears to have come simply because there is a large cash inflow and for no other reason,” Smith wrote. “We … do not believe that management deserves life-changing wealth for selling a good business at a fair price.”
Playtech will provide further details on its bonus plans in a shareholder circular later this month. A company spokeswoman said it continually engaged with its investors in private, adding: “It is our policy not to comment on our conversations with individual shareholders.”
Playtech, which is valued at £2.3 billion, was set up 25 years ago by Teddy Sagi, an Israeli billionaire with interests in tech and property.
Weizer, 49, has been its chief executive since 2007 and was paid €2.93 million last year. The Playtech boss worked on an unsuccessful bid for the company two years ago.