Crown Resorts in danger of second strike, James Packer to front WA royal commission

A second consecutive ‘no’ vote is threatened against Crown Resorts’ remuneration report. Meanwhile, James Packer is set to face another public grilling.

Crown Resorts has prepared for an adverse finding against its Melbourne casino. Picture: NCA NewsWire / David Crosling.

Crown Resorts is facing the prospect of a second strike against its remuneration report at its annual general meeting next Thursday after the Australian Shareholders’ Association (ASA) said it opposed millions in “excessive termination payments” doled out to executives who left the company during a year of controversies.

However, the ASA won’t support the board spill motion that is triggered if more than 25 per cent of shareholders vote against the pay packets of Crown’s executives and directors for a second consecutive year, believing it “is not in the future interest of Crown shareholder” for any more bodies to depart the depleted board.

It comes as news emerged that reclusive former Crown Resorts chairman and largest shareholder James Packer is set to appear via video at the WA royal commission into the company on October 29, his first public appearance in more than a year.

The WA commission is investigating whether the Crown is suitable to operate the state’s only casino. Its planned grilling of Mr Packer is set to occur around the time the verdict of a Victorian royal commission into Crown’s Melbourne casino will be publicly released by the state government.

Both commissions were called after NSW’s Bergin Inquiry in February found Crown temporarily unsuitable to operate its brand-new Sydney casino over corporate governance deficiencies and the likely facilitation of money laundering.

The inquiry prompted a corporate overhaul at Crown, resulting in the departure of directors and executives linked to Mr Packer and viewed as responsible for its failings.

But as its latest annual report revealed last month, Crown’s executive wage bill surged 69 per cent to $23.7m in the 2021 financial year as it booked a $261m loss, with departing executives collecting massive termination benefits.

ASA monitor Geoffrey Bowd wrote “on balance” the group would vote against the remuneration report, noting that departed executives 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.

“Although the ASA has supported Crown remuneration resolutions in recent years it is evident that the quantum of remuneration for performance have not been warranted and contractual terms have not restricted excessive termination payments,” he said.

The retail investor interest group will also oppose $5.1m sign-on performance rights and retirement benefits for Crown’s new CEO, former Lendlease boss Steve McCann.

“The ASA accepts that the sign-on can recognise the need to attract executive talent to a position carrying considerable risk. However, the bulk of the new CEO sign-on rights should be subject to performance hurdles and not just constitute a retention benefit,” Mr Bowd said.

The ASA will approve the election of new Crown non-executive directors Bruce Carter and Nigel Morrison, as well as the election of incoming chairman and former Telstra executive Ziggy Switkowski.

It will also support a resolution to boost the total salary cap for all board members by 20 per cent to $3m to attract more board members as 10 directors had departed the company in the last year.

“ASA has reservations about the stated claim that directors have increased workload and responsibilities. However, on balance, we accept that there is justification for a fee cap increase,” Mr Bowd said.

For the same reason, the ASA said it would oppose a conditional spill motion that would emerge if the remuneration report received a second strike, as it would lead to the departure of the directors who approved the report – Jane Halton, Bruce Carter and Nigel Morrison.

“We firmly believe that a spill is not in the future interests of Crown shareholders,” Mr Bowd said.

A first strike was achieved at the 2020 AGM last October in the midst of the Bergin Inquiry, when investors expressed their displeasure at the controversy engulfing the company.

Mr Packer refrained from using his 37 per cent stake to push through the report in 2020 and will have to do so again this year, as the NSW gaming regulator has barred him from using his shareholding to influence Crown following the Bergin Inquiry.

His upcoming appearance at the WA commission will likely scrutinise the reasons for his control of Crown being limited raised in the Bergin Inquiry.

Incoming chairman Dr Switkowski is also scheduled to appear at the WA commission at the end of October, marking his first public appearance as a representative of Crown.