Gold Coast business: Star Group defends handing out executive bonuses while taking JobKeeper payments
Star Group has defended handing out executive bonuses while taking JobKeeper wages to keep staff employed during the COVID-19 downturn.
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STAR Group has come under fire at its annual meeting for handing out executive bonuses while taking JobKeeper wages during the COVID-19 downturn.
The Gold Coast casino operator held its first ever virtual AGM this morning with shareholders questioning the company’s decision to hand out bonuses during the COVID crisis.
CEO Matt Bekier saw his salary fall by $200,000 to $1.5 million for FY20, however he was granted a bonus of $829,872 in shares redeemable after 12 months.
At the same time during the past financial year the company received $64.8 million from taxpayers in the form of JobKeeper payments.
One shareholder commented: “Bonuses must be suspended during these uncertain times. People are losing their jobs and livings (sic) and bonuses during these times are too rich.”
A representative from the Australian Shareholder Association asked how staff had perceived the bonuses.
Chairman John O’Neill in response said the bonuses were not paid in cash but rather new share issues.
“They are share issues with 12-month restrictions,” he said.
“The board recognises that pre-covid the performance of the business was strong and showing pleasing momentum. During FY20 we also achieved key milestones that will help drive long-term value for shareholders. As a board we also considered the retention of key talent as we prepare for competition in Sydney.”
Turning to the question of staff questions on short term incentives, Mr O’Neill noted the support provided to employees during the pandemic.
“We have provided reasons behind the equity incentives. It is also worth noting that the Star received a lot of positive feedback from employees around the paid pandemic leave and hardship programs specifically aimed at assisting team members during a period of significant … impact,” he said.
“The investment in our people through those initiatives was more than $21 million.”
Mr O’Neill said Star took the views of shareholders “extremely seriously” and appreciated it had been a tough year.
During the pandemic Star provided two weeks of paid leave to impacted employees costing the company $18 million.
Earlier in a prepared statement Mr O’Neill said there was no connection between JobKeeper and the bonuses.
He said every JobKeeper dollar had gone to staff either stood down or on reduced hours or was used to return staff to their roles.
Eighty-five per cent of Star’s 9000-strong workforce had returned to their jobs.
In Queensland, 15 per cent of the workforce remained stood down and were ineligible for JobKeeper.
Mr Bekier told shareholders the company had provided $5 million for a hardship program to assist stood-down employees.
In a trading update Mr Bekier said the company’s performance so far this financial year had been “pleasing” with domestic gaming revenue 25 per cent down on the prior period.
“The Queensland properties have traded strongly with domestic gaming revenue broadly in-line with the prior period, notwithstanding the spatial distancing requirements and reduced trading hours that are currently in place,” he said.
EARLIER: SEPTEMBER 24
STAR Group has welcomed the Queensland Government’s decision to open up the Queensland/NSW border bubble to northern NSW towns.
Premier Annastacia Palaszczuk made the announcement earlier this week that the Queensland/NSW border bubble will be extended to Byron Bay, Lismore, Richmond Valley, Glen Innes and Ballina local government areas from 1am on October 1.
A spokesman for the operator of Star Gold Coast said: “Any relaxation of restrictions is welcomed. Most importantly for us, we have staff and suppliers on both sides of the border and this provides them with more accessibility to The Star Gold Coast.”
EARLIER: AUGUST 21
STAR CEO Matt Bekier says the Gold Coast is uniquely placed to benefit from a potential boom in domestic tourism once the border reopens with NSW.
The owner/operator of Star Gold Coast hotel and casino yesterday reported a net loss of $95 million for the past financial year.
It said normalised profit – which adjusts results for a win rate of 1.35 per cent or $1.35 for every $100 bet – was $121 million, 46 per cent down on the prior period.
Star said prior to COVID pretax earnings in Queensland, which includes its Brisbane casino, were up 33.1 per cent to $109 million.
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COVID put a halt to positive momentum. However, Star said it was on its way back.
In July domestic gaming revenue was just 20 per cent down on the previous period on reduced capacity at its casinos.
Mr Bekier said there was an opportunity for the Gold Coast to benefit from domestic tourists spending more on the Glitter Strip that would otherwise go on holidays overseas to Bali and Miami and other destinations.
Australians spent $65 billion on overseas travel in 2018-19 and Qantas has hinted that international travel may be a year away.
“We are seeing that (an increase in domestic spending) now in a very small way. Our wine sales in the restaurants are up quite substantially – people are trading up,” he said.
“They are not going to go overseas so rather than going to a restaurant and paying $40 a bottle they are happy to go higher.”
Mr Bekier said prior to COVID Star’s Gold Coast assets were its strongest performers.
Star said normalised pretax earnings were 69.8 per cent higher prior to the virus spreading through the country.
“We have been working through our loyalty program to move more of our high-value domestic premium customers into the Gold Coast,” he said.
“It is a great product and they really love that so I hope, and I’m confident, that as soon as the borders open up again we can flick that switch and bring that business back.”
He said Star, which has invested heavily in its Gold Coast operations in recent years including building The Darling hotel, was planning a new “tourist attraction” in Broadbeach.
He would not provide details but said it would be something different from its current offering.
“We just need more assets … to really drive that domestic business.”
Mr Bekier said the Dorsett hotel could suffer if international flights did not return by late next year when the hotel was expected to be completed.
“So in the short term I am not that worried. In the long term if flights don’t come back we will be hurting.
“Everything else that we currently have is well placed and resonates well with the domestic customer.”
EARLIER:
THE Star’s Gold Coast operations were performing strongly with pre-tax earnings up close to 70 per cent when the ‘unprecedented’ challenge of COVID-19 forced it to shutdown.
Star, which also has casinos in Sydney and Brisbane, this morning reported its full-year results this morning split into pre and post-COVID periods.
For the period July 1 to February 29 (before COVID) statutory gross revenue was $1.586 billion – 7.6 per cent lower than the prior corresponding period.
However, normalised or underlying earnings – which strip out one-off items – was 7.5 per cent higher at $1.818 billion and the company recorded a net profit of $62 million.
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When the four months of COVID are included (Star shut its Gold Coast casino on March 23) those figures blow out to statutory gross revenue of $1.749 million (down 30.4 per cent) and normalised revenue of $1.973 billion (down 21.1 per cent).
The company recorded a statutory net loss of $95 million.
Chairman John O’Neill said Star had continued to execute its growth strategy despite an “unprecedented environment”.
“While acknowledging the impacts of COVID-19 have been extraordinarily challenging, the fundamental earnings prospects for The Star remain unchanged, underpinned by valuable long-term licences in sought after destinations.”
In Queensland Star reported pretax earnings increased by 33.1 per cent prior to COVID.
Domestic revenue was up 5.2 per cent and VIP revenue increased by 80.3 per cent.
Star recorded EBIT of $65 million for the full year – down 39 per cent on the prior period.
The company said in July domestic gaming revenue was 80 per cent of the previous period on reduced capacity at its casinos.
It said domestic trends in Queensland up until August 17 were similar to July.
CEO Matt Bekier said the company implemented “comprehensive” actions to mitigate the impact of COVID including safeguarding staff and securing additional funding.
“Important milestones were achieved, with a long-term agreement on NSW gaming tax and casino EGM exclusivity to FY2041 and reaching a favourable conclusion on the Gold Coast second licence process.
“The Star’s business is fundamentally strong, evidenced by the step up in earnings growth from 1H FY2020 into early 2H FY2020. The long term value uplift from investments in our network of integrated resorts and continuing operational improvements to drive visitations and earnings remain substantial.”
EARLIER:
SHAREHOLDERS and analysts are braced for grim reading material when The Star issues its full-year results on Thursday.
The operator of the Gold Coast’s sole casino reported revenue of $516 million in Queensland for the first half.
That was up 10.9 per cent on the previous period driven by a strong performance from its Gold Coast assets amid challenging conditions, including cautious consumers, bushfires and the coronavirus.
However, that was before the Matt Bekier-led company was forced to shut down its casinos, including restaurants and bars, and stand down 90 per cent of its staff due to the spread of the virus.
In April, it estimated it needed $10 million in operating expenses for every month of the shutdown and $220 million in cash for a three-month shutdown.
Table games and pokies returned to the Gold Coast on July 3 but under restrictions including a cap on the number of patrons.
Analyst Morgans says it expects a second-half result “heavily impacted” by COVID-19.
It is forecasting a net loss for the group and no final dividend.
Star has previously said there will be no final dividend for the year. It previously delayed its first-half dividend payment of 10.5 cents from April 1 to July 2.
About 22 per cent of Star shareholders opted to reinvest their dividends.
Originally published as Gold Coast business: Star Group defends handing out executive bonuses while taking JobKeeper payments