888 yesterday became the second London-listed gambling company in as many weeks to face an independent shareholder revolt over executive pay.
A significant minority of independent shareholders in 888 withheld support for the company’s remuneration report at the company’s AGM in Gibraltar yesterday. This followed investor groups Pirc and the Association of British Insurers (ABI) criticising the non-disclosure of performance criteria for awarding CFO Aviad Kobrine a £523,000 bonus in excess of his maximum salary-based entitlement and a large US$500,000 ex gratia payment to former CEO Gigi Levy. The ABI even issued an alert to investors ahead of the vote.
The measure was however passed by votes representing 83% of the issued share capital - due mainly to more than 60% of the shares being tightly held by the company’s founders – the Shaked and Ben-Yitzhak brothers – through family trusts. 12.85% of shareholders voted against the pay package, with the remaining shareholders withholding their votes.
888 justified Kobrine’s bonus cash payment, representing 170% of salary in excess of his maxiumum entitlement of 120%, in terms of his “extraordinary achievements” in the last financial year. Pirc had also criticised 888’s failure to disclose the share price at grant date of 2.6 million share options awarded to Kobrine last year.
Passage of its remuneration report was in the end far more comfortable for 888 than it was for William Hill last week, when just 50.11% voted in favour after institutional investors rounded on the £1.2m “incentive bonus” awarded to CEO Ralph Topping to lock him in to the company until at least the end of 2013.
Chairman Gareth Davis said in a statement after the meeting that while he understood shareholder concerns, stoked by several advisory bodies, this had been an “exceptional case”, given the performance of the business since Topping took charge four years ago. William Hill’s share price increased by 18% in 2011 and 33% to date in 2012, mainly due to the stellar performance of the online business since it formed the William Hill Online JV with Playtech.
