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Oct
27th

Shareholder Revolts Plague Online Gaming Companies

The occupy Wall Street protests started small in New York City and quickly spread around the world. The participants are protesting corporate greed and the inequitable distribution of wealth.  In the United States the wealth disparity is the largest in 90 years. At some companies shareholders are also revolting against what they see as excessive executive compensation.  News reports indicate that shareholders at two online gaming firms are protesting high executive salaries and perks.

In May of this year a significant number of shareholders at William Hill voted against a pay increase for top executives. Holders of 176 million William Hill shares voted against a pay increase for Paul Topping who has been in charge at William Hill since 2008. Holders of 25 million William Hill shared declined to vote and holders of 331 million shares voted for the increase. Shareholders took exception to Topping’s raise from £475,000 to £540,000. Topping earned a total of £1.65 million. Those defending the raise pointed out that Topping had not had a pay increase since his pay was frozen in 2009. Those defending the pay increase say it is because of “the significant progress the business has made under his leadership”, and will bring Topping’s pay “more in line with other companies of our size and complexity.” Mr. Topping said of the pay freeze “I got appointed below the level of the previous incumbent and accepted that. When we went into a downturn I went to the board and said ‘we are going to implement a pay freeze, forget my review until things improve’.” Topping also said he understood the ‘sensitivity’ of the issue and said “Maybe we didn’t explain it as well as we should have done.”

In Mat British bookmaker Ladbrokes experienced one of the biggest shareholder revolts in the company’s history as 40% of investors voted against Ladbrokes remuneration report   or withheld support. Ladbrokes shareholders were upset with a £350,000 retention bonus that was awarded to finance director Brian Wallace. Wallace was paid £1.58 million in 2010 and was offered a bonus worth 70% of his pay after he indicated his intention to leave the company. Shareholders were angered because Wallace took the retention bonus and left anyway. At the time the vote was a major embarrassment for the company. In recent years shareholder activists have been opposed to retention bonuses because they are not linked to financial performance. In a statement Ladbrokes stated “We have noted the disquiet expressed by some of our shareholders and have recorded it for future reference.”