The chairman of Tabcorp, Paula Dwyer, has hit out at attempts to attack the performance and accountability of the company’s directors over the handling of the failed expansion into Britain, declaring the Australian economy would suffer if boards stop taking risks “for fear of retribution”.
Ms Dwyer said investors and proxy advisers had raised questions over the accountability of directors, including Steven Gregg, and management over the SunBets joint venture with New Corporation in Britain, which it abandoned earlier this year, and Tabcorp’s Federal Court action with government agency AUSTRAC over breaches of anti-monetary laundering provisions.
She said the board has acted “strongly and decisively” to address the issues around money laundering as soon as they were raised and said AUSTRAC had acknowledged the company’s response.
“Given the acknowledgment of the regulator and the facts around Tabcorp board accountability as approved by the Federal Court, it is unfair and incorrect for directors of Tabcorp to continue to be targeted on perceptions of failed accountability,” Ms Dwyer said.
She was even stronger on SunBets, describing it as a reasonable risk to take, particularly given the start-up would not affect the company’s dividend. Management remuneration had been reduced as a result of the $91 million loss that the company took when it abandoned the venture early.
“The board of Tabcorp debates issues and opportunities vigorously and at length. While SunBets was one such strategic opportunity, the combination with Tatts was another. On this occasion, I think this transaction will prove to be a hugely important step for Tabcorp and underpin our success for years to come.
“It is critical for the success of Australian businesses, the economy overall and in the interests of shareholders, that boards and management teams make considered investments to drive long term growth and shareholder value.
“In fact, this is a key aspect of the board’s role. Not all these bets will pay off. However, it does not serve the interests of shareholders for boards and management to do nothing for fear of retribution.”
But Tabcorp received a first “strike” against its remuneration report on Wednesday (a 25 per cent vote against represents a strike) and did give way on bonuses paid to management for the completion of the merger with Tatts Group.
Investors and proxy advisers were unimpressed with the cash and share payments, and Ms Dwyer said Tabcorp would change the conditions attached to the share payments such that they would be subject to hurdles around the achievement of synergies and benefits from the merger. The vesting period will be extended from two years to three and a half years.
While Tabcorp did not provide a trading update at its AGM, Deutsche Bank analyst Mark Wilson said he believed Tabcorp had enjoyed a strong start to the 2019 financial year, based on the bank’s own lotteries and wagering data.
“In lotteries, the average jackpot value was up 27 per cent, the number of jackpots above $15 million was up 88 per cent and the aggregate jackpot value was up 99 per cent,” Mr Wilson said in a note to clients.
“In wagering, tote turnover was up 1.1 per cent and the company enjoyed a very successful Everest Day on the weekend.”