Two Investors Condemn Playtech’s €134M Executive Bonus Proposal

Ahead of the finalization of the sale of Snaitech, Playtech’s business-to-consumer (B2C) arm, to Flutter Entertainment in a multi-billion-dollar deal, investors in Playtech criticized a proposed compensation package of more than $100 million.

Palm Harbour Capital Criticized the Remuneration Proposal

The aforementioned compensation package was confirmed back in September. The proposal seeks to benefit Playtech’s management with a sum of €100 million ($109 million). In addition, executives at Snaitech are proposed to collect €34 million ($37.3 million) as compensation in light of the sale of the business to Flutter. The landmark acquisition has a price tag of £2.3 billion (approx. $3 billion).

However, one Playtech investor reportedly deemed the proposed compensation package “obscene,” while another one called it “most egregious case of shareholder value expropriation in the history of UK public markets.” Palm Harbour Capital LLP’s managing partner, Peter Smith, was critical of the compensation proposed to benefit the management at Snaitech and Playtech.

As announced by NEXT.io, he criticized the proposed remuneration package for lacking transparency. At the same time, Smith deemed the package “obscene,” adding that the company doesn’t believe that the management team “deserves life-changing wealth for selling a good business at a fair price, even if their performance has generally been good.”

Although Smith pointed to the increase in Playtech’s share price, he also acknowledged the potential challenges related to illegal gambling markets and its relations with Caliplay. Additionally, he pointed to the company’s undervalued stock. Still, Smith did support the idea of compensating Playtech’s management but argued against what was described as an obscene payday.

“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.“

Peter Smith, managing partner at Palm Harbour Capital LLP

The Proposed Compensation Is an “Egregious Case of Shareholder Value Expropriation”

Similar were the concerns of Jermery Raper, the CEO of Raper Capital. He slammed the proposed compensation package for Playtech and Snaitech’s management, describing his position in an open letter. “Simply put, the Plans, as structured, would constitute the most egregious case of shareholder value expropriation in the history of UK public markets,” he wrote.

Moreover, Raper explained that the proposed compensation plans “exemplify crony capitalism at its absolute worst, and represents exactly the type of outcome the Governance Code was created to prevent.” The executive argued that he hadn’t heard of a similar case in his two decades of experience in the vertical.

Raper added that the proposed compensation constitutes 10-15% of the value of the entire company. “I have never seen so naked an attempt to siphon value from stockholders into the pockets of management,” he wrote, further criticizing the remuneration proposal.

For the moment, the proposed compensation is yet to receive approval. Similar to other compensation proposals for the management, the package must receive shareholder approval in order to be implemented. A vote on the matter is expected next month.