Crown Resorts got $110m in COVID assistance but still paid incentives, annual report reveals

Casino group Crown received more than $100m in COVID assistance payments and scrapped its dividend but still managed nearly $2m in executive incentives.

Crown Resorts’ annual report reveals the casino group received $110m in COVID assistance payments.

The James Packer-backed Crown Resorts has moved to introduce clawback provisions on executive bonuses as part of a governance shake-up at the company, as it resolved not to pay any short-term incentives for 2020 after its profits collapsed due to the COVID-19 pandemic.

Crown’s annual report, released on Friday, revealed it had introduced a plan where a component of the bonus payable to a senior executive is deferred for a year. The payment can then be forfeited if issues emerge that mean the bonus should not have been paid for that year.

The deferred component will be half of the CEO’s bonus entitlement, and 25 per cent for the CEO of Australian Resorts.

As part of a governance shake-up at the company, the executive chairman role was scrapped in January and in August Crown also appointed KPMG as its new auditor.

The company is currently the subject of an inquiry by the NSW Independent Liquor and Gaming Commission into its suitability to hold a casino license in Sydney, following media allegations last year that the company worked with junket operators linked to organised crime and money laundering.

The inquiry has so far heard evidence of failures in the company’s risk management processes, which left the board in the dark about its dealings with junket operators linked to organised crime and the use of company bank accounts by VIP players to allegedly launder money.

In the annual report chairman Helen Coonan said the board accepted the company had more work to do to improve its compliance and governance practices.

“The board accepts that we must continue to improve in order to ensure Crown has the highest standards of compliance and governance. That is a goal to which we as a board are absolutely committed. While we have made material improvements to our compliance and governance processes over the last few years, there is more work that needs to be done,’’ she said.

“The inquiry currently being conducted by the New South Wales Independent Liquor and Gaming Authority (ILGA Inquiry) is an opportunity to improve the regulatory environment as a whole, and for Crown to reflect on how we as an organisation can better meet community expectations.”

The annual report showed that while Crown scrapped short-term bonuses for its executives in 2020, it apportioned them $1.84m worth of payments under the company’s long-term incentive plan, in a year when the company received over $110m in government assistance payments.

However the options granted under the plan, which was approved in 2017, expire in February. The Crown share price — which closed 4c higher at $9.26 on Friday — remains well below the strike price for the options of over $11, meaning the payments will likely never be made.

Crown in August announced it had scrapped its final dividend and secured a wavier of its banking covenants after its net profit fell 80 per cent following the forced closure of its casinos in Melbourne and Perth.

From April 16, 2020 to June 30, 2020, Crown’s senior executives, other than former executive chairman John Alexander, had their fixed pay cut by 20 per cent in response to the impacts of the COVID-19 pandemic on Crown.

They also received no increase in their fixed remuneration for the 2021 financial year.

The annual report reveals Mr Alexander, who stepped down as executive chairman in January and became an executive director of the company, is entitled to a fixed payment of $3.54m under his 12-month employment contract.

The notice of meeting for the company’s upcoming AGM, released on Friday, also revealed that Mr Alexander will not seek re-election and will retire from the company at the meeting.

Crown recorded $43.4m in government payroll subsidies to June 30 for employees that continued to work in either a full or partial capacity and $67.9m in JobKeeper payments for the same period for staff that were stood down.

Earlier this year, Crown controversially paid its interim dividend despite standing down the majority of its workforce and applying for the federal government’s JobKeeper program.

The annual report reveals the board established a special purpose committee in August 2019 to oversee matters relating to the allegations made against Crown that are the subject of the ILGA inquiry.

The chairman of the committee received a payment of $85,000, while each member received $50,000. The Committee met 21 times before it was disbanded on 30 January 2020.