Tabcorp Cans $41m Pay Deal For Ceo

Sydney Morning Herald

Tuesday November 28, 2006

Helen Westerman

GAMING group Tabcorp has withdrawn an $41.48 million options package it planned to offer managing director Matthew Slatter.

The group's remuneration policy raised the ire of its retail investors at its annual meeting, but the withdrawal helped avert an embarrassing vote of no confidence from institutional shareholders.

Joining Telstra and Coles Myer investors in rebuffs to directors over the generosity of remuneration packages, shareholders directed 23.1 million proxies, around 8 per cent, against the company's remuneration report in a non-binding vote at its annual meeting in Melbourne yesterday.

The backlash occurred when Tabcorp at the last minute withdrew a vote on the controversial performance option package of 2.4 million shares for Mr Slatter after influential proxies advisers said a 4.5 per cent earnings per share growth hurdle attached to the options was too low.

"The standard mantra is that executives should be rewarded when shareholders are rewarded," Australian Shareholders Association deputy chairman John Curry said.

Tabcorp directors earlier failed to circumvent a vote of no confidence from institutional shareholders by raising the hurdle to 6.5 per cent for a partial vesting.

At the meeting, chairman Michael Robinson revealed 60 per cent of proxies would have been directed against the resolution.

Mr Robinson said proxies advisers ISS and Corporate Governance International altered their advice after Tabcorp agreed to lift the hurdle. But the Thanksgiving public holiday in the US late last week meant the advice had not reached many funds.

Directors also faced questions about Tabcorp's Keno terminal joint venture in China, which is 12 months behind schedule and has only rolled out 260 machines from the expected 2000.

Mr Slatter conceded the operation had been more difficult than expected, although he said the outlook was improving.

"One of the things we could have done better was get more resources on the ground earlier," Mr Slatter said.

Tabcorp forecast flat earnings in the first half after a rise in costs from the integration of its computer system linking its NSW and Victorian operations before the spring racing carnival. Second-half earnings are forecast to rise.

The group recorded 3.9 per cent revenue growth in the period to November 18, with the best performance from wagering, which climbed 8.8 per cent.

Tabcorp fell 18c to $16.59.

© 2006 Sydney Morning Herald

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