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Playtech plc (Playtech), has once again a shareholder revolt against executive pay at its annual meeting on 30 June 2022, with 30.3% of votes cast against the gambling software development company’s remuneration report. This level of dissent is similar to that received at Playtech’s 2021 AGM, which 30.8% and 24.5% opposition against its report and remuneration policy amendments respectively. In response to this year’s revolt, the company stated the following:

‘The Board notes that resolution 2, an advisory vote on the Remuneration Report, was passed with the necessary majority but received less than 80% of votes in favour.

Following an extended period of shareholder and stakeholder engagement, the Remuneration Committee has introduced material changes to the Company's Remuneration Policy, itself approved at last year's AGM.

Whilst shareholders noted the significant improvement to remuneration, it is clear that a number of shareholders did not agree with the decision to grant a one-off share award to the Chief Executive Officer in 2019, which partially vested in 2021. This award was the result of an extensive shareholder engagement programme driven by some of the Company's largest institutional investors. The requisite majority of shareholders voted in favour of the scheme at a General Meeting in December 2019, with many citing the better alignment between management and shareholders.

Playtech has already begun engaging with those shareholders who voted against this resolution and will continue consulting with them to understand their specific concerns.’

The statement alludes to the company’s 2019 remuneration policy, which senior executives a controversial long-term share incentive award with a ‘maximum opportunity of 250% of salary with normal grants of 200% and 150% of salary in performance shares for the CEO and CFO respectively’. The policy narrowly in the teeth of fierce shareholder opposition (report: 41.8%; policy: 41.0%). This was followed by the of the remuneration report to pass at the 2020 AGM, with 63.7% of votes cast against. Indeed, Playtech has proved one of the main sufferers of remuneration dissent in recent years, with the company seeing significant investor revolts (at least 20% opposition) over pay at its last six AGMs (2017–2022). This includes two failed remuneration reports, with an average report dissent of 43.1%, as well as three votes on remuneration policies over the six-year period despite UK corporate law only requiring policies to be put forward every three years (for more information, see Practice Note: ).

As investor opposition against Playtech’s 2022 remuneration report has once again crossed the 20% threshold, the resolution will be logged on the Investment Association’s public register of shareholder dissent. In addition, the company will be required to publish an update statement within six months of its AGM on the views it has received from shareholders as to why they voted against, as well as the actions taken by the company (if any) to address the concerns of its shareholders.

Playtech concentrates on board reform

Given that Playtech’s update statement for its 2021 AGM to even mention remuneration, let alone the dissent against both its report and policy, it is perhaps unsurprising that the revolt against executive remuneration in 2022 is of a similar magnitude to that of 2021. Rather, in its statement the company chose instead to concentrate on its board shake-up in response to the widespread dissent against the re-election of its directors at its 2021 AGM. The worst culprits, John Jackson and Claire Milne, who received 39.8% and 35.3% opposition  respectively, have since stepped down from the board. However, Ian Penrose, who also received significant opposition (27.6%), has been promoted to senior independent director, in addition to his role as chair of the Remuneration Committee: 

‘On 1 June 2021, Brian Mattingley assumed the position of Chairman after his appointment on 3 March 2021. Since Brian’s arrival, the composition of the Board has evolved considerably. Longstanding Board members John Jackson and Claire Milne stepped down, while the Board welcomed the arrival of new Non-Executive Director Linda Marston-Weston.

Brian has also appointed a new Senior Independent Director, Ian Penrose, and a new Chair of the Audit Committee, John Krumins, in order to both satisfy specific concerns raised by shareholders and to align the overall functioning of the Board more closely with typical market practice. The Board has also established a new Sustainability and Public Policy Committee to steer Playtech towards stronger governance around sustainability, with Linda Marston-Weston assuming the role as its Chair.’

It seems that the board overhaul proved popular with shareholders, with sizeable dissent against director re-elections at this year’s meeting all but disappearing. Although it is noticeable that the director with the highest opposition was Penrose, with 8.5% of votes cast against. This was likely due to his role as Remuneration Committee chair.

Other areas of dissent

In addition to opposition to its remuneration report, Playtech’s 2022 AGM saw its two disapplication of pre-emption rights resolutions fall short of the support required to pass for the second year in a row. As special resolutions, they required a majority of 75% to pass. However, this year saw an uptick in dissent, with both resolutions receiving opposition of 41.0%, compared to 36.0% and 36.9% respectively at its 2021 AGM. Playtech is the second company after to see its two disapplication of pre-emption rights resolutions fail during the 2022 AGM season (for more information, see: Remuneration and pre-emption remain hot topics as 2022 AGM season kicks off).

The reasons as to why shareholders voted down these resolutions at the company’s 2021 AGM also remained unaddressed in the company’s update statement. However, with board reform no longer being an area of dissent this year, the company has been left with only its remuneration report and the disapplication resolutions to discuss in its 2022 update statement, which is to be disclosed later this year. Perhaps it will shed some light on the latest in a long line of shareholder revolts for the online gaming specialist, although it should be noted that Playtech is still in discussions with TTB Partners Ltd in relation to a possible offer for the gambling company. On 17 June 2022, the ‘put up or shut up’ deadline for the Hong Kong-based boutique investment and advisory company to announce a firm intention to make an offer for Playtech in accordance with Rule 2.7 of the Takeover Code was to 17 July 2022. It is likely that these ongoing talks will preoccupy the company’s board for at least for the next few weeks. Addressing shareholder dissent may therefore just have to wait until the company’s future becomes a little clearer.