GVC Holdings CEO Accepts Voluntary Pay CutTisha Walden | 31 May 2019
The Chief Executive Officer of the United Kingdom's largest gambling operator will take a £150,000 salary reduction from 1 June. Besides several online betting brands, GVC Holdings also owns bookmaker giants Coral and Ladbrokes. Kenny Alexander, who has served as the group's CEO for the past 12 years, volunteered to take the cut after recent “frank and open” remuneration discussions with the company's largest shareholders, held just before the annual shareholder meeting.
The Shareholders' Rebellion
Discontent among GVC's stakeholders began in 2018. Almost half of the investors voted against pay schemes that would pay the group's 2 highest-ranking executives, including the Chief Executive Officer, combined salaries of £67 million for that fiscal year.
Alexander would get £19.1 million of that amount, thanks in part to the “Legacy Award” for the 2015 acquisition of bwin.party. Richard Buxton, who is a top-five shareholder in GVC, said shareholders were concerned by what they considered a disparity between the company's performance and the long-term incentive plan for Alexander.
In addition to failing to guide GVC Holdings to meet its latest targets, Alexander also raised ire by selling shares and ultimately causing the company to lose about 20% of its market value. He and Chairman Lee Feldman took the decision to sell just days after he was quoted as saying that the stock was “significantly undervalued”.
Stakeholders Remain Dissatisfied
Since Alexander volunteered the paycheque change just before the meeting where GVC Holdings investors will vote on the pay policy, it's unclear whether it was an act for the good of the company, or one of self-preservation.
In the discussions held between the CEO, the remuneration committee Chair and the group's chairman, he was pressured to accept both a smaller salary and responsibility for a larger role in GVC's lower performance and market value. Rather than risk angering the disgruntled investors further, he seems to have decided to appease them with a reduced pay package for 2018.
Alexander has volunteered to be paid £800,000 instead of £950,000. Essentially, this amounts to an increase on his previous £50,000 base salary of 6.7%, rather than 13%. However, his earnings are still substantial enough that shareholder advisory agents and investors both say the pay cut is insufficient. They also assert that his long-term incentive plan needs to be addressed. The next moves that Alexander, GVC Holdings and the shareholders make will determine the future of the company's administration, and will be watched with interest.