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17 June 2005
Non-Execs to Net Big Fees In
Float Of PartyGaming
The
independence of PartyGaming's non-executive directors was
called into question last night after it emerged that they
will receive big payments when the online
poker company
completes its £4.76 billion flotation.
Brian Larcombe, the former
3i chief executive, will get a one-off fee of £1
million as deputy chairman and senior nonexecutive. Three
other nonexecutives, Lars Berg, Nigel Kenny and Rod Perry,
will each get £100,000.
Mr Larcombe, who like the
others is reinvesting 60 per cent of his payment in shares,
will also get a salary of £175,000, while his
colleagues will get £75,000.
In its flotation
prospectus, published yesterday, PartyGaming insisted that
the arrangements are "not such as could prejudice the
independence" of the four men.
The document also raised
the alarming prospect that the owners could face arrest and
prosecution in the United States. It admits that the
company's activities "are considered to be illegal by the
relevant authorities", but says that case law has
established that online poker sites are excluded from
gambling legislation.
Analysts have also
expressed surprise at the three-year contract awarded to
Michael Jackson, the chairman, in defiance of the Combined
Code on Corporate Governance. He will also get a one-off
payment of £1.5 million. Mr Jackson's decision to
retain his chairmanship of Sage Group, the accountancy
software firm, also breaches the code, which stipulates that
one individual should not hold two FTSE
chairmanships.
A PartyGaming spokesman
said that Mr Jackson's experience of high-growth companies
and technological services had made him uniquely qualified
for the job, and the length of his £500,000-a-year
contract had been necessary to hire him.
He added: "As we refined
down what we were looking for in a chairman, the only man
left standing was Michael Jackson. Michael ticked every
box."
Richard Segal, the chief
executive, will receive shares worth up to £51 million
at flotation, of which he plans to sell about £10
million at that time. His salary is £500,000 and he
will also receive £40,000 a year to cover accommodation
in Gibraltar, where PartyGaming is based.
Mr Segal will stay in
Gibraltar during the week, returning to the UK at weekends.
The cost of his commuter flights will also be covered by the
company.
PartyGaming, which owns
the Party
Poker website,
yesterday confirmed an indicative price range for its
listing of 111p-127p, valuing it at £4.44 billion to
£5.08 billion, or £4.76 billion at the midpoint.
Its four owners are cashing in up to £930 million at
flotation, retaining a combined 71.5 per cent
stake.
That is at the bottom end
of previously mooted valuations and some investors believe
the shares will have to be priced lower still to get the
flotation away. One big institution said it believed that
£4.2 billion to £4.4 billion was a more realistic
price range.
The main issue surrounding
the flotation — shares are due to start trading on June
30 — is the regulatory risk, in particular the grey
area of internet poker in the US, where most of its players
are based.
One fund manager said: "We
are very sceptical about it. There is the whole risk
profile, although it has been priced at a discount to others
in the sector." Cantor Index, the spread betting firm, has
set a grey market spread of 111p-116p.
Related pages:
William
Hill Poker Room
Poker
Tycoons Face Jail Threat
US
Gambling Laws Threaten £5.5bn
Float
UK
Poker Firm Set For Listing
Party
Gaming Deals Its Hand To Play For Market
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