Playtech, the global gambling technology company, is encountering criticism from shareholders over a proposed bonus scheme that would reward senior executives with up to €100 million. The controversy follows the company’s recent €2.3 billion sale of its Italian sports betting and gaming business, Snaitech, to Flutter Entertainment, sparking concerns about corporate governance and fairness.

Announced on the same day as the Snaitech sale, the bonus proposal outlines substantial rewards for Playtech’s executive team, particularly for CEO Mor Weizer, who is set to be the largest beneficiary. While the company has not disclosed the exact amount Weizer would receive, the proposal has caused significant unrest among investors due to the absence of clear performance metrics linked to the payouts. Playtech executives are also guaranteed 10% of the gain from any future disposals, a provision that has intensified the concerns of several shareholders.

A separate pool of €34 million has been allocated to reward the management team at Snaitech, with CEO Fabio Schiavolin poised to receive the largest share. However, the absence of performance-based targets within both bonus plans has led some investors to accuse the company of unjustified payouts.

Shareholder Dissent Emerges

One of the most vocal critics, Jeremy Raper, a Playtech investor managing his own family office, publicly criticized the scheme in an open letter to the chair of Playtech’s remuneration committee. Raper described the proposed bonus packages as “the most egregious case of shareholder value expropriation in the history of UK public markets,” according to Financial Times. He argued that rewarding executives without any performance benchmarks undermines shareholder value and sets a dangerous precedent for future business decisions.

Raper further compared the proposed payouts to industry standards, claiming that the bonus could see Weizer earning more than ten times the median pay for a FTSE 30 CEO in 2022. He warned that the plan could incentivize Playtech’s executives to prioritize quick, possibly damaging, deals to secure their portion of the 10% gain clause.

Further Criticism and Opposition

Peter Smith, managing partner of Palm Harbour Capital, also expressed strong opposition, sending his own letter to Playtech’s chairman, Brian Mattingley, the day after the bonus proposal was made public. Smith echoed the concerns about the lack of performance targets, calling the bonuses an unnecessary addition to an already substantial executive compensation package.

“There is already a strong remuneration package in place linked to shareholder returns,” Smith wrote. “This additional payment appears to have come simply because of a large cash inflow and for no other reason.”

Playtech’s senior management remuneration has been a point of contention for some time. In 2023, Weizer’s total compensation amounted to €2.9 million, and while Playtech’s share price has risen by nearly 80% in the last 12 months, the company has underperformed compared to the FTSE 250 in terms of shareholder returns since 2018.

In response to the criticism, Weizer defended the bonus scheme during an earnings call, referring to it as an “incentive plan” designed to align the interests of management with shareholders. He emphasized that the plan aims to encourage the company’s leadership to grow Playtech’s business and increase shareholder value.

Support Amid the Controversy

Despite the backlash, Playtech has secured support from shareholders holding a collective stake of 34.4%, who have committed to voting in favor of the proposed bonus plan. The company has also indicated that it engages with its shareholders privately and believes this is the most effective way to address concerns.

In a statement, Playtech reiterated its commitment to shareholder engagement, saying: “Playtech actively and continuously engages with its shareholders in private, and strongly believes that is the most constructive way to engage.” While the exact date for a vote on the bonus plan has not been set, Playtech has confirmed that it will take place before the end of November. The outcome will determine whether the company moves forward with the current plan or revises it in light of the ongoing criticism.