Tuesday, January 02, 2007

PartyGaming has awarded more shares and multimillion-pound bonuses to its
senior executives, despite the group's plunging share price, in a move that
could irritate institutional shareholders. The online gambling group's new
management incentive arrangements will take the new incentives and bonus
package of Mitch Garber, the chief executive, to about £18.5 million.
Although the figure was less than the £40.5 million that Mr Garber's share
options package was valued at in April, the share price has fallen from 150p
to 31¾p in the same period. Shareholders that bought into PartyGaming at the
initial public offering in 2005 and the secondary placing in June have lost
about £925 million. The company argued that the Unlawful Internet Gambling
Enforcement Act in the United States has "severely impacted the value of
incentive arrangements for the executive directors and other key employees
of the group". PartyGaming defended the move as vital to secure the most
talented management. A spokesman said: "Some institutional shareholders
asked us what we were going to do to incentivise executives, what with the
share price coming down so much. I don't think you can please all
shareholders, but many were concerned that we couldn't retain senior
people."
Mr Garber has had the shareholder return performance targets scrapped over
his options for 20 million shares. The 20 million shares can be awarded next
year in eight monthly tranches from May to December. He has been granted new
share options of a further 15 million shares, which will vest in 30 equal
monthly tranches until May 2009. He will also be paid £3 million in cash in
30 equal instalments until May 1, 2009, and will receive a minimum bonus of
£2 million provided he remains with the company on December 1, 2007. Michael
Jackson, chairman of PartyGaming, said: "PartyGaming has the leading
executive team in online gaming. Whilst the passing of the Unlawful Internet
Gambling Enforcement Act changed the business environment, the online gaming
sector has remained no less competitive both in terms of attracting and
retaining talented individuals."