ASA attacks Tabcorp CEO’s $4.5m pay packet and urges a shareholder revolt against director

The Australian Shareholders Association is targeting Tabcorp’s executive pay for a second time, saying salaries don’t reflect its split with The Lottery Corporation.

The ASA Tabcorp CEO Adam Rytenskild’s remuneration doesn’t reflect the demerger from The Lottery Corporation. Picture: Luis Enrique Ascui

Executives at wagering giant Tabcorp are paid too much, says the Australian Shareholder Association as it advises a vote against the company’s remuneration report for the second time.

The ASA is also advising shareholders to vote against the re-election of David Gallop as a Tabcorp director, after its concerns about executive pay fell on deaf ears.

“Mr Gallop is the chair of the nominations and remuneration committee. As such, he is responsible for overseeing remuneration,” the ASA said in its voting intentions.

“We assess that the Tabcorp CEO and chairman are overpaid. Our concerns were raised with Mr Gallop last year, yet no meaningful change has been made by Mr Gallop and his committee. For this reason, the ASA proposes to vote against Mr Gallop’s re-­election.”

This is despite the ASA highlighting the sport credentials of Mr Gallop, who is a Cricket NSW director and served as the National Rugby League’s chief executive from 2002 to 2012.

Tabcorp director David Gallop. Picture: Stuart McEvoy

“He has qualifications in law and executive experience in the sports industry. He needs to roughly double his current shareholding to meet Tabcorp shareholding policy of one year’s fee value by, in his case, 2025. His workload is within ASA guidelines and he is considered independent,” the ASA said.

The ASA’s key issue is that Tabcorp’s remuneration framework has “not reflected the reduction in size and complexity of the company after the demerger with The Lottery Corporation”.

“We consider the remuneration levels of the CEO and chairman are excessive. This is best illustrated by Tabcorp market capitalisation shrinking by 77 per cent post demerger, yet CEO remuneration is down only around 10 per cent and chairman fees down 15 per cent.

“When the reverse happened in 2017 (Tabcorp acquiring Tatts), the CEO remuneration increased by 43 per cent and the chairman fee increased by 37 per cent.

“The company argues that they have to pay ‘above median’ benchmarks because they are not competing on a level playing field, they are transitioning the company, and there is a higher degree of personal risk and exposure working in the gambling industry. But even allowing for ‘above median’ at the 75th percentile level, the pay is too high.”

Chief executive Adam Rytenskild’s remuneration target – including fixed pay and bonuses – is $4.5m this year but could hit $6.75m if he outperforms. Last year chairman Bruce Akhurst’s fees, which included superannuation, totalled $517,300.

Tabcorp chair Bruce Akhurst, left, at Flemington in 2022. The ASA says he is paid too much. Picture: Luis Enrique Ascui

The ASA is also advising shareholders to reject the granting options to Mr Rytenskild.

In the company’s annual report, Mr Gallop said: “The board reviewed Tabcorp’s remuneration benchmarking peer group. Prior to the Demerger, the peer group consisted of the ASX 25-75 companies which is no longer relevant.

“The board considered several factors when determining an appropriate peer group, such as Tabcorp’s market capitalisation, annual revenue, ASX industry classification, the quality of directors required for a gambling company, operating in a complex environment, with heavy regulation and a higher degree of personal risk and exposure for individual directors, and the substantial time commitment required by directors to support management in the delivery of Tabcorp’s strategic transformation. Balancing the above factors, the board determined that a peer group consisting of ASX 51-200 companies with annual revenue of between $1bn and $4bn is appropriate.”

An ASA campaign for a vote against Tabcorp’s remuneration report failed last year.