Crown Resorts hit with second strike despite James Packer backing but avoids board spill motion

Big payouts to controversial departed executives has seen Crown hit with a second strike, despite support from the gaming group’s biggest shareholder James Packer.

Jane Halton, above, says the vote represented confidence in Crown’s new board.

Crown Resorts has copped a second strike against its remuneration report – despite the support of 37 per cent shareholder James Packer – as smaller investors revolted against the millions of dollars paid in termination benefits to controversial former executives.

But the pressured Crown board avoided a spill motion from the second strike, with shareholders backing stability ahead of this month’s release of a Victorian royal commission report into whether Crown is suitable to operate its Melbourne casino.

Crown is also facing a royal commission into its Perth casino, due to report next March.

A total of 30.7 per cent of shareholders voted against the remuneration report at the company’s annual general meeting on Thursday, well above the 25 per cent threshold for a second strike.

It is understood the second strike came even though Mr Packer’s Consolidated Press Holdings – Crown’s largest shareholder – threw its weight behind the Crown board on every shareholder resolution on the agenda, implying Crown’s smaller shareholders rejected the report.

Interim chairman Jane Halton told shareholders the golden handshakes for executives who left the company after the NSW Bergin inquiry temporarily revoked Crown’s Sydney casino licence in February were the product of legacy contracts.

“We are putting in place arrangements to ensure that we’re much more in step in terms of the structure and arrangements in respect of remuneration,” she said, adding that future termination arrangements would be “in keeping with the kinds of arrangements we expect in a ASX-listed company.”

Crown’s annual report last month revealed that controversial former executives including Ken Barton, Barry Felstead and Todd Nisbett received more than $12m in termination payments and accrued sick leave entitlements on their way out the door.

Having slapped Crown on the wrist over the pay issue, 95.9 per cent of shareholders voted against the conditional spill motion, saving Crown’s three directors from having to stand for re-election.

The influential CalPERS pension fund had stated its intention to vote against both the remuneration report and the spill motion, while it is understood the Australian Council of Superannuation Investors (ACSI) recommended a vote against the remuneration report.

Ms Halton said the vote represented confidence in Crown’s new board.

“We would like to thank shareholders for their support of our reconstituted board as we continue to drive the reforms necessary to restore confidence and trust in Crown,” Ms Halton said.

Under questioning from shareholders, Ms Halton revealed that Crown was paying the legal costs of former executives and directors who had been called by the Victorian and Perth royal commissions.

“It’s common practice, and it certainly is the practice of Crown, that all directors and officers are indemnified for legal expenses for claims made relating to the role that they have as either a director or officer,” she said.

But she confirmed that the Crown board had “no interactions” with Mr Packer and his former nominee directors, after the Bergin inquiry prompted NSW’s gaming regulator to ban him from seeking representation on Crown’s board.

Crown’s new CEO, former Lendlease boss Steve McCann said his last interaction with Mr Packer was “several years ago” in relation to negotiations over the construction of Crown’s $2.2bn Sydney casino.

Mr Packer will make his first public appearance in more than a year at the WA royal commission next week.

The appointments of Ms Halton’s fellow directors Nigel Morrison and Bruce Carter, who joined earlier this year, were overwhelmingly approved by Crown’s shareholders, as was a motion to increase a fee cap for non-executive directors.

Meanwhile, non-executive director Antonia Korsanos confirmed her earlier intention to resign at the end of AGM while a motion to elect former RMIT chancellor Ziggy Switkowski as chairman was withdrawn as he is yet to receive full approval from state gaming regulators to take up the role.

Dr Switkowski is set to succeed Ms Halton as chairman when the approvals are received, with shareholders to approve his position at next year’s AGM, alongside newly announced non-executive director Anne Ward. 

Shareholders mostly backed resolutions to provide Mr McCann with retirement benefits and more than $5m in sign-on rights, with 21 per cent and 11.6 per cent voting against the measures respectively. Ms Halton said Mr McCann’s benefits were necessary to “to attract, motivate and retain a highly credentialed CEO at what was, and continues to be, a challenging and uncertain time for the business”.

The future of Crown’s Victorian casino licence will be known when the government releases the conclusions of a royal commission. Picture: NCA NewsWire / David Crosling

Mr McCann told shareholders that while he was optimistic about Crown’s future, he was also realistic about “the pressures we are facing in the short term” due to the impacts of regulatory scrutiny and Covid.

Crown, which recorded a $260m net loss last financial year, has reached a deal with its bankers to pause dividends to avoid defaulting on its debt in the event it loses its Victorian or WA casino licence.

It has secured an additional $250m debt facility from one of its banks, and Mr McCann revealed on Thursday that an unnamed “domestic industry superannuation fund” had committed to a $150m unsecured debt facility.

The company will also benefit from $500m in Crown Sydney apartment sale proceeds expected to be received in the next year.

However, Mr McCann said checking guests’ vaccination status at its newly reopened Sydney and Melbourne properties would “result in higher security costs in the near term” while the financial burden of dealing with two royal commissions and a corporate overhaul would lift from $111m to $130m this financial year.

Crown Perth, which has been operating restriction-free since July, saw gaming floor revenue between July 12 and October 17 come in 9 per cent lower than last year.

Revenue from Crown’s digital business Betfair and DGN is down 10 per cent on last year.

Ms Halton said Crown would not pay back the more than $170m it received under the government’s JobKeeper wage subsidy scheme, as it made a loss last financial year.

“It’s not our intention, because we did make a loss … to be repaying those funds because they have helped sustain the business and staff across the country,” Ms Halton said.