The incentive share and cash plan announced recently for Party Gaming
top brass 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.