Two Playtech shareholders have railed against proposed remuneration plans for company execs following the €2.3bn (£1.9bn) sale of Snaitech to Flutter Entertainment.
As part of the multi-billion-euro deal, Playtech confirmed bonus awards for its top execs, including CEO Mor Weizer, for a maximum aggregate amount of €100m.
The €100m will be paid out in cash in three tranches – 60% on completion of the deal and a further 20% on the first and second anniversary of the transaction’s completion date.
The nine-figure bonus fund comes in the context of an anticipated return to shareholders of between €1.7bn and €1.8bn following the sale of the Italy-facing B2C brand to the FanDuel parent company.
Additionally, Snaitech’s senior management team will be entitled to a separate aggregate cash bonus pool of €34m.
When the bonus fund was announced alongside the deal, Playtech also revealed its framework for the ‘Playtech Transformation Plan’.
Playtech said participants in the plan could take a share in a “pool of value” equal to 10% of the value distributed to shareholders following the completion of the Snaitech transaction.
Participants in the plan, which also include Playtech senior management, would also be able to take part on a similar basis in any capital returns regarding the future sale of Playtech.
The proposals are subject to shareholder approval.
However, Palm Harbour Capital and Raper Capital have penned open letters damning the proposals ahead of a stockholder vote on the matter.
Palm Harbour’s letter, signed by managing partner Peter Smith and addressed to Playtech chair Brian Mattingley, said the incentive amounted to a “tremendous transfer of value from shareholders to management”.
London-based Palm Harbour said the existing remuneration package was sufficient, and argued the sale of Snaitech was a standard business decision, meaning management should not be unduly rewarded.
Smith wrote: “We, therefore do not believe that management deserves life-changing wealth for selling a good business at a fair price, even if their performance has generally been good.
“They deserve to be well compensated, but it makes little sense to give them an obscene payday for doing what any sensible manager could have done.
“We are not against a payment to management, but it should be reasonable, and we believe their current pay package meets this definition.”
In the case of Raper Capital, the Singapore-based firm’s five-page letter said the incentive plan would “constitute the most egregious case of shareholder value expropriation in the history of UK public markets”.
The letter, written by founder Jeremy Raper and addressed to remuneration committee chair Anna Massion, was damning in its assessment of Playtech’s new remuneration policy.
Raper wrote: “In my over two decades of public markets investing globally, I have never seen so naked an attempt to siphon value from stockholders into the pockets of management.
“Indeed, I have searched long and hard in the history books to find a remuneration scheme even remotely as execrable – but there is none. The plans, in their abject failure, truly set a new low.”
While Raper and Smith have both gone public with their concerns, EGR understands they hold relatively small stakes in the FTSE 250 company.
Speaking to EGR, a Playtech spokesperson said: “It is our policy not to comment on our conversations with individual shareholders.
“Playtech actively and continuously engages with its shareholders in private, and strongly believes that is the most constructive way to engage.”
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