Party Gaming Bonus Plan Under Scrutiny
Published: Wednesday, January 03, 2007 Online-Casinos.com
PARTY GAMING BONUS PLAN UNDER SCRUTINY
But founding shareholders are carrying the burden for incentives
The incentive share and cash plan announced recently for Party Gaming top brass (see previous Online-Casinos.com/InfoPowa report) was under scrutiny this week by the group's major shareholders in case it breaches UK corporate governance codes, reports The Guardian.
The unusually structured GBP 40 million plan to incentivise and retain key staff following a collapse in Party's share price following the American ban on financial transactions for online gambling has no conditional links to the future share price or performance of the company, something that investors usually demand from executive remuneration schemes.
In this case, however the incentives are not being funded out of shareholders' pockets. The founders of Party Gaming have dipped into their own holdings to fund the lock-in arrangement.
Founding Party Gaming shareholders Ruth Parasol, Russell DeLeon and Anurag Dikshit have used their stakes to inject 40 million shares into the existing employee benefit trust. The bonuses do not dilute other shareholder values for this reason.
Under the new pay scheme chief executive Mitch Garber is to receive GBP19 million as long as he stays until 2009 while finance director Martin Weigold will receive GBP 5.6 million if he stays until the end of 2008. Another GBP15 million will be shared among other senior employees.
The company has said that it is footing the bill for only GBP2 million of the new pay scheme, comprising a cash bonus paid to CEO Garber.
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