Playtech Investors Furious Over Proposed €100 Million Bonus

Investors are outraged over Playtech‘s proposed €100 million executive bonus scheme, calling it an act of “egregious shareholder value expropriation.” The controversy follows Playtech’s recent announcement of a €2.3 billion sale of its Snaitech unit to Flutter Entertainment. Now, investors argue that the bonus plan is disconnected from company performance and transparency. As Playtech faces growing criticism, the situation highlights the ongoing debate over executive compensation and corporate governance in the gaming industry. Stakeholders are demanding fairness and alignment of interests between management and shareholders. The bonus package is slated for a shareholder vote in November, a decision that will shape Playtech’s corporate future.

Investors Outraged Over Playtech’s €100M Executive Bonus Following Snaitech Sale

Playtech is facing fierce criticism from investors over a proposed €100 million executive bonus package, announced in the wake of its lucrative sale of Snaitech to Flutter Entertainment. This hefty bonus plan has sparked outrage among shareholders who argue that the payout is disproportionate and not aligned with company performance.

The situation escalated last week when Jeremy Raper, CEO of Raper Capital, issued an open letter addressed to the chair of Playtech’s remuneration committee. In the letter, he condemned the compensation package for management, including CEO Mor Weizer, labeling it as “the most egregious case of shareholder value expropriation in the history of UK public markets.”

Raper’s critique follows Playtech’s earlier disclosure of its intention to award €100 million to Playtech executives and an additional €34 million to Snaitech’s management team. This payout comes on the heels of the Italian business unit’s sale to Flutter Entertainment, valued at £2.3 billion.

A Critique of Corporate Governance and Shareholder Value

Raper did not mince words, stating that the bonus scheme “exemplifies crony capitalism at its absolute worst” and is precisely what corporate governance codes were designed to prevent. He argued that the plan would result in 10-15% of the company’s entire value being surrendered to management, a move he sees as a significant failure for shareholders.

Adding fuel to the fire, Raper highlighted Playtech’s lack of transparency in disclosing CEO Mor Weizer’s specific share in the €100 million package, describing it as a glaring red flag in corporate governance. To activate the bonus plan, Playtech will require shareholder approval in a vote scheduled for November, setting the stage for what could be a contentious showdown.

Palm Harbour Capital Joins the Backlash

Raper is not alone in his disapproval. Peter Smith, managing partner at Palm Harbour Capital LLP, also released an open letter slamming the bonus scheme as “obscene” and out of sync with Playtech’s actual performance. While Smith acknowledged Playtech’s 90% rise in share price over the past year, he pointed out that much of this increase was due to the stock being previously undervalued. He emphasized ongoing uncertainties around Playtech’s Caliplay B2B relationship, its exposure to unregulated markets, and a history of poor governance.

Smith argued, “Management deserves to be well compensated, but it makes little sense to give them an obscene payday for selling a good business at a fair price.” He further noted that the market seemed to share his sentiments, as Playtech’s stock price dropped following the announcement of the bonus plan, when it should have surged on the news of the Snaitech deal closing.

Current Support and the Road Ahead

Despite the backlash, approximately 35% of Playtech’s shareholders have so far indicated their support for the proposed bonus scheme. However, both Raper Capital and Palm Harbour are considered relatively minor shareholders in Playtech, which adds another layer of complexity to the unfolding drama.

A Playtech spokesperson responded to the growing criticism, stating, “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.”

A Test for Corporate Governance in the Gaming Industry

The proposed bonus package at Playtech has ignited a debate over executive compensation, shareholder value, and corporate governance within the gaming industry. With investors like Raper Capital and Palm Harbour Capital voicing strong opposition, the upcoming shareholder vote in November is poised to be a decisive moment. This episode underscores the need for transparency and alignment of interests between executives and shareholders, as stakeholders demand accountability in the evolving landscape of corporate governance. The outcome of this vote could set a significant precedent for how compensation and value are balanced in the industry moving forward.