Shareholders in FTSE 250 company, GVC Holdings voted heavily against its remuneration report at its AGM this week (20th June). However, the betting firm voiced its commitment to engaging with shareholders and has recruited a new chair of its remuneration committee to show it is developing a new approach to executive remuneration.

GVC, which has moved from being an Aim-listed to becoming a premium-listed company in the past 18 months, received a 43% vote against its remuneration report. However, the binding vote for its remuneration policy received 90% backing. The company said that the remuneration arrangements disclosed in the 2016 Directors’ remuneration report were agreed when GVC was AIM-listed and fully disclosed in its 2015 prospectus. Its long-term incentive plan arrangements had also been approved by 95% of GVC’s shareholders in December 2015, the company said.

GVC Holdings remuneration report
GVC Holdings said it is responding to shareholder pay concerns

Manifest’s say on pay report produced ahead of the AGM gave GVC its lowest grade of F and stated that the total remuneration being awarded was excessive given the company’s size and scale, its sector and its performance. Specifically, Manifest’s analysis highlighted poor alignment between executive and shareholder interests; excessive retention incentives; performance conditions which do not apply to
all long-term incentive awards and severance provisions which include payment of two years’ salary and the equivalent of two years’ bonus.

Following the AGM GVC’s chairman, Lee Feldman said the pay vote needed to be seen in the context of the large support for GVC’s remuneration policy, which he said was more representative of the company’s current and future remuneration philosophy. To address pay and governance concerns Jane Anscombe, recently retired from her role as gaming and entertainment analyst at Edison Investment Research, has been appointed as an independent non-executive director and will now chair the remuneration committee and join the nominations committee.

Feldman said: “Acknowledging that investors in FTSE250 companies can have different expectations on executive remuneration, GVC’s remuneration committee has already embarked on developing a new remuneration policy with its independent remuneration consultant and we have disclosed publicly our aim of consulting with our major shareholders on this matter by October 2017. This process will be led by Jane Anscombe, appointed today an independent non-executive director and the new chair of the remuneration committee. Jane will be supported in the consultation by GVC’s senior independent director, Will Whitehorn.

Manifest’s meeting business report noted that the company is currently in transition as it has 12 months to comply with the more stringent listing rules associated with the premium listing that it gained in July last year. Prior to that, it had moved from moved from an Aim-listing to becoming a standard listed company on the London Stock Exchange in February 2016.  Manifest assessed GVC against the requirements of a small company, however, there were a number of governance issues that emerged from its analysis.

Concerns related to the number of non-executive directors that have material business relationships with the company and so can not be considered independent. Karl Diacono is chief executive of Fenlex Corporate Services which was paid for company secretarial and other work in Malta; Peter Isola is a partner at Isolas, a law firm in Gibraltar which charged relating to the acquisition of last year and Norbert Teufelberger is former CEO of Additionally, he was granted share options under the company’s long-term incentive plan, and also advises the company on the German market strategy. Meanwhile, Feldman is the managing partner of Twin Lakes Capital which also received payments in relation to office services.

These independence concerns meant that requirements associated with the composition of committees were not being met. Since the appointment of Anscombe, there have been changes to the membership of the committees. The nominations committee is now made up of Feldman, Anscombe and Whitehorne. However, Diacono remains a member of the audit committee and Isola remains a member of the remuneration committee despite the UK’s corporate governance code recommendation that all members of these committees should be independent.

Last Updated: 23 June 2017
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