Tabcorp Performance Package In Firing Line

The Age

Tuesday November 28, 2006

By HELEN WESTERMAN

GAMING giant Tabcorp has raised the ire of its retail investors over executive remuneration - but avoided an embarrassing vote of no confidence from institutional shareholders.

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

The backlash was sparked after Tabcorp withdrew a vote at the last minute on a controversial performance package for chief executive Matthew Slatter after influential proxies advisers said a hurdle of 4.5 per cent growth in earnings per share was too low.

Taking yesterday's closing price as a guide, Mr Slatter's share options would be worth just under $40 million.

"The standard mantra is that executives should be rewarded when shareholders are rewarded," said Australian Shareholder Association deputy chairman John Curry. "It's a bit of a warning signal to the board."

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

Chairman Michael Robinson said this had led proxies advisers ISS and Corporate Governance International to withdraw their objection. However, the Thanksgiving public holiday in the US late last week meant the change of advice had not reached many funds, he said.

For this reason the board had withdrawn the proposal.

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

Speaking after the meeting, Mr Slatter conceded that 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," he said.

"We were trying to do too much remotely and that's difficult in terms of the relationship in China."

Tabcorp has forecast flat earnings for the first half due to increased costs from the integration of its computer system linking its NSW and Victorian operations before the spring racing carnival.

But second-half earnings are forecast to rise.

Tabcorp 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 mainly due to a strong spring racing carnival season in Victoria.

But NSW wagering continued to underperform.

Tabcorp shares fell 18? to $16.59.

Ziggy Switkowski and Anthony Hodgson formally joined the board at yesterday's meeting.

© 2006 The Age

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