Shareholders urged to vote down €15m Betfair pay for Corcoran
Betfair shareholders have been urged by an influential investor advisory body not to approve chief executive Breon Corcoran's bumper £11.6m (€15.7m) pay packet at the company's annual general meeting next week.
The embarrassing rebuke comes as Betfair and Paddy Power plot a merger to create the world's biggest online gambling group. Mr Corcoran, inset - a former Paddy Power executive - will lead the combined group.
Advisory group PIRC said Mr Corcoran's near £1m bonus at Betfair is excessive, as is his total remuneration.
Mr Corcoran has also received a £10m golden 'hello' payment that was allocated to him when he joined Betfair in 2012.
The Mullingar native's basic salary at Betfair during the last financial year rose from £515,000 to £528,000, while his annual bonus jumped to £953,000 from £706,000.
PIRC has argued that the financial performance of Betfair does not justify the pay received by Mr Corcoran, as total chief executive pay over a five-year period at the gambling firm "is not commensurate with the change in total shareholder return over the same period".
But regardless of the outcome of the AGM vote, Mr Corcoran has already received his pay. Even if shareholders fail to approve Betfair's remuneration report, that won't result in any clawback.
PIRC said its main concern with Betfair is that its accounts do not enable a determination of profits available for distribution, based on the numbers as stated in the accounts.
The advisory group has said Betfair shareholders should vote against receiving the annual report as a result.
In its 2014 annual report, Betfair conceded that its final dividend in 2011, and the interim and final dividends for 2012 and 2013, were paid erroneously because, under law, the company "did not have sufficient distributable reserves to make those distributions and so they should not have been paid by the company to its shareholders".
It said the error arose because of certain changes to technical guidance issued by the Institute of Chartered Accountants in England and Wales.
Also, it admitted at the time that the purchase of 6.5m shares in April 2012 was also undertaken when Betfair "did not have sufficient distributable reserves".
The dividend payments and the share purchases had been approved by shareholders.
PIRC has also advised shareholders not to approve the reappointment of KPMG as auditors.
"KPMG has been in place as auditor for more than 10 years," according to PIRC. "There are concerns that failure to regularly rotate the audit firm can potentially compromise the independence of the auditor."
PIRC has also said shareholders should oppose the vote to approve the dividend due to the issues raised with the group's annual report and accounts.
PIRC has, however, advised Betfair shareholders to vote in favour of the reappointment of Mr Corcoran as a director, but that they oppose the re-election of chairman Gerald Corbett.
The annual general meeting will be held next Wednesday in London.
Shares in Betfair and Paddy Power have soared since the pair announced last week that they plan to merge to create an €8bn gambling powerhouse.
Even before the announcement, Betfair's shares had performed strongly under Mr Corcoran's stewardship. Customer numbers and cash generation at Betfair have significantly improved since he took over.
The merger between Paddy Power and Betfair is likely to be completed in January, with the newly combined group probably maintaining its headquarters in Dublin.
The two companies will also be seeking significant synergies, likely to mean jobs losses.